KDB announces ₩800B to help Korean Air Lines acquire Asiana
Korea Development Bank (KDB) will inject 800 billion won ($700 million) in Korean Air Lines’ acquisition of debt-laden Asiana Airlines.
The state-run bank announced Monday it will purchase Hanjin KAL’s newly issued shares, worth 500 billion won, and will acquire exchangeable bonds worth 300 billion won. Hanjin KAL is the parent company of Korean Air Lines.
Korean Air Lines will raise capital worth 2.5 trillion won by issuing new shares, 730 billion won of which will be purchased by Hanjin KAL, using the state bank’s money.
The carrier will use 1.8 trillion won of the newly raised capital to become the biggest shareholder of Asiana Airlines, by purchasing 1.5 trillion won of the budget airline’s new shares and 300 billion worth of its console bonds without maturity.
“The latest decision was made out of concerns that the normalization of Korea’s airlines business could be uncertain even after the coronavirus without a fundamental improvement in competitiveness, with the increasing competition in the global airlines industry as well as prolonged business downturn from the coronavirus,” the KDB said in a statement issued Monday.
“The latest transaction will help the integrated airline to have competitiveness on par with the global top 10.”
Budget carriers owned by the two airlines — Jin Air, Air Busan and Air Seoul — will also get integrated afterwards for more effective management of air routes and a mileage system.
Shares of Asiana Airlines soared 27.27 percent Monday morning after the announcement, trading at 5,460 won. Hanjin KAL’s shares rose by 2.96 percent compared to the previous trading day and Korean Air Lines' rose by 7.1 percent.
BY JIN EUN-SOO [firstname.lastname@example.org]
More in Industry
SK Telcom merges two security services subsidiaries
KDB requests sit-down with Asiana unions about takeover
Are you Taycan to me?
Facebook hit with $6 million penalty for customer data leak
Spinoff to give LG chairman's uncle his own conglomerate