Seoul Central District Court approved merger of Korean Air and Asiana Airlines

Report by : Gan Yung Chyan, KUCINTA SETIA

On 1 December 2020, the Seoul Central District Court rejected the application of Grace Holdings, an investment company under the private equity fund KCGI, to the Hanjin Group holding company Hanjin KAL to prohibit the issuance of new shares.

Accordingly, the Korea Development Bank, the main creditor bank of Asiana Airlines, will be able to inject 500 billion won (approximately RMB 2.966 billion) into Korean Air’s parent company, Hanjin KAL, as scheduled, through a third-party allotment of capital.

KCGI filed an application to the court on the 18th of last month to prohibit Hanjin KAL from issuing new shares. Recently, Korean Air decided to acquire Asiana Airlines. KCGI objected to this, saying that the Industrial Bank invested in Hanjin KAL to protect the management rights of the major shareholder, Hanjin Group Chairman Cho Wontae.

The Industrial Bank previously decided to invest 800 billion won to support Korean Air’s acquisition of Asiana Airlines, and to inject 500 billion won into Korean Air’s parent company, Hanjin Group holding company Hanjin KAL, through a third-party rights issue.