Report by : Gan Yung Chyan
/ KUCINTA SETIA
According to Yonhap News Agency, Jeju Air announced on 23 July 2020 that it will terminate its share purchase agreement (SPA) with Eastar Jet. More than 1,600 Eastar employees may lose their jobs.
Jeju Air and Eastar Jet signed a memorandum of understanding on equity acquisition in December 2019. The much-anticipated South Korea’s first airline marriage plan finally fell apart 7 months later due to factors such as the epidemic, which not only had a negative impact on the restructuring of the aviation industry, but was also likely to trigger a breach of contract liability lawsuit.
Affected by the epidemic, the two parties are facing a liquidity crisis and conflicts surrounding the implementation of the prerequisites in the acquisition agreement. Including wages in arrears, Eastar Jet owes a total of 170 billion won (about 990 million dollars). Although Lee Sangji, founder of Eastar Jet and member of the ruling party Democratic Party, announced last month that his family members will return all the shares of Eastar Jet held by Eastar Jet Holdings, various disputes surrounding his family members continue to ferment, and the acquisition of shares agreement eventually fell through.
Jeju Air said that despite the government’s active support and arbitration for the acquisition, there are too many uncertain risks in the company’s forcible promotion of the acquisition, and it regrets the failure of the acquisition.
As a result, Eaststar Jet, who is unable to save itself, will inevitably go through bankruptcy procedures. The livelihoods of Eaststar employees who have not received wages for more than half a year but agreed to stop salary payouts to support the merger are in crisis.
No comments:
Post a Comment