Hanjin KAL’s asset sales continue

Hanjin KAL, which owns 30 percent of Korean Air Lines, announced Friday that it will downsize its hotel and leisure businesses as it works to streamline its operations and improve its finances.

The group’s directors agreed to reorganize money-losing hotel and leisure assets and sell low-profit, non-core businesses, while focusing on strengthening the competitiveness of the core airline and logistics operations and enhancing shareholder value, the company said in a statement.

Hanjin KAL has decided to sell the Paradise Hotel in Seogwipo, Jeju Island, and to review the profitability three other hotels for possible sale, the statement said.

The company’s board has also voted to give itself the authority to choose the company’s representative director. Previously, the Hanjin Group chairman served as representative director.

On Thursday, the company announced it would unload a few specific non-core assets, including land and a building in Songhyeon-dong, central Seoul, and an entire 100 percent stake in Wangsan Leisure Development, a company that operates the Wangsan Marina Resort in Incheon.

Korean Air Lines purchased the Songhyeon-dong site from Samsung Life Insurance in 2009 and planned to develop a cultural complex.

But the development project faced multiple development challenges, such as building height restrictions and cultural asset preservation restrictions as the land is located near the Blue House and Gyeongbok Palace, one of the country’s most important cultural assets.

The board also agreed to establish a committee to improve the transparency of the company’s governance structure. The committee will review and make recommendations about key management decisions.

The moves come as a number of major shareholders are battling for control of the board ahead of a shareholder meeting next month.

Cho Hyun-ah is cooperating with the Korea Corporate Governance Improvement fund and Bando Engineering & Construction to install professional managers to lead the company.

BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]