Underwear maker files letters of intent to buy Eastar Jet

Financially troubled budget carrier Eastar Jet has received letters of intent from some investors for its stake up for sale and will select a final bidder next month.

Eastar Jet, currently under a court-led rehabilitation scheme, has received letters of intent from several companies, including a consortium led by Kanglim, a local equipment maker under underwear company Ssang Bang Wool, and other private equity funds, according to industry sources.

The budget carrier selected a preliminary preferred investor in early May and then kicked off an open auction on May 14 in a "stalking horse" bid selection process.

The company didn't provide details about the preliminary preferred investor.

In the stalking-horse bid, Eastar picked a preliminary preferred bidder ahead of an auction, in which other bidders submit their prices. The stalking horse sets the low-end bidding price so that other bidders cannot underbid the price.

Several companies have shown an interest in acquiring Eastar after the bankruptcy court approved the corporate rehabilitation process for the carrier in February.

Eastar is required to submit its debt-repayment and other rehabilitation programs to the court by July 20, which was delayed by two months.

The budget carrier earlier said it aims to receive an air operator certificate from the transport ministry once the Seoul bankruptcy court accepts its rehabilitation program to resume domestic flights within this year.

Eastar has suspended most of its flights on domestic and international routes since March last year due to the coronavirus' impact on the airline industry, and its air operator certificate became ineffective in May 2020.

It has had difficulties in finding a strategic investor since July last year, when Jeju Air scrapped its plan to acquire the carrier amid the prolonged Covid-19 pandemic.

Yonhap