Jeju Air gives up on Eastar Jet
Jeju Air abandoned its acquisition of cash-strapped Eastar Jet, saying its shareholders didn’t think it was a good idea.
Jeju Air released a statement on Thursday to “cancel the stock purchase agreement” that was signed in March.
“Despite the government’s active support and effort to mediate, we concluded the level of uncertainty Jeju Air needs to assume by pushing ahead with the acquisition is too big,” wrote Jeju Air. “It’s also true that shareholders and people of interest are expressing major concerns about the damage [that could be done through the acquisition].”
Jeju Air made the announcement a week after Eastar Jet failed to adhere to a timeline to meet certain obligations agreed to by the two parties. Jeju Air argues that failure gives it the legal right to call off the acquisition.
On March 2, Jeju Air signed a deal with Eastar Holdings, which owns 39.6 percent of Eastar Jet, to acquire the airline.
Eastar Jet was already suffering financially before the deal was signed, and the outbreak of Covid-19 made its situation worse.
Jeju Air said Eastar Jet has 170 billion won ($142 million) in accounts payable and 26 billion won in unpaid wages.
Jeju Air “feels sorry for not being able to close the merger and acquisition deal,” wrote the budget carrier.
BY JIN MIN-JI [firstname.lastname@example.org]