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Korean Air has safely passed the’first gateway’ for the acquisition of Asiana Airlines. Despite the opposition to the national pension, which is the second largest shareholder, it succeeded in persuading shareholders and changed the articles of incorporation for the’total number of shares’ for a capital increase. Accordingly, weight is placed on the prospect that the future takeover operation will proceed.
On the 6th, Korean Air held an extraordinary general shareholders’ meeting at its headquarters in Gonghang-dong, Seoul, and decided to amend the articles of association for a paid-in capital increase for the purpose of acquiring Asiana Airlines. The extraordinary shareholders’ meeting on this day attended 9772,2790 shares, 55.73% of the total number of 175,322,466 shares with voting rights. Among them, 69.98% agreed to change the articles of association. As a result, the total number of shares specified in Article 5, Paragraph 2 of the Articles of Incorporation has changed from 250 million shares to 700 million shares.
The second-largest shareholder, the National Pension Service (with a stake of 8.11%), publicly opposed the agenda, saying that there is fear of damaging shareholder value by deciding to take over Asiana Airlines the day before without due diligence. However, major shareholders, including the Employee Stock Ownership Association (6.39%) and Credit Switzerland (3.75%), attracted the support of a large number of minority shareholders, and eventually the amendment to the articles of association was approved.
With this decision, Korean Air will be able to carry out a paid-in increase to shareholders of 2.5 trillion won, which is due to be paid on March 12, as scheduled. Hanjin Kal, the major shareholder, will also invest 730 billion won in the capital increase. On the 15th of the same month, an intermediate payment of 400 billion won will be deposited with Asiana Airlines. Earlier, on the 3rd of last month, he had already paid 300 billion won as a down payment. In June, Asiana Airlines plans to pay the remaining 800 billion won by participating in a paid-in capital increase of 1.5 trillion won to a third party. After completing this process, Korean Air will become the largest shareholder with 63.9% stake in Asiana Airlines.
Regarding the results of the shareholders’ meeting, Korean Air formed a takeover committee organized by sectors such as planning, finance, passengers, cargo, etc. I am running it,” he said. Chairman Woo Ki-hong was the chairman of the takeover chair, and Seung-beom Lee was the vice president of customer service. The acquisition committee plans to complete the integrated plan by March 17th after reviewing the cost structure and contract relationship between the two companies. In this process, the integration method and procedure for the three low-cost airlines (LCC) (Jin Air, Air Busan, and Air Seoul) are also expected to materialize.
The remaining variable in the future is the business combination review. Korean Air plans to submit a business combination declaration to domestic and international competition authorities by the 14th of this month. In response, President Woo said at a meeting on the 2nd of last month, “Based on the current Incheon International Airport, the passenger slot share of the two companies is 38.5% and about 40% if freighters are included.” Insisted.
However, on the 4th, the National Assembly Legislative Research Office pointed out concerns about monopoly in a report. The 38.5% of the figure previously revealed by President Woo is only the share of all international passenger routes departing from Incheon International Airport, and it is intended that there is a possibility of monopoly by major routes. In addition, the report predicted that if the FTC approves the merger, it could be subject to the sale of business rights on some routes with high concerns about monopoly. Along with this, there is a possibility that KCGI, a private equity fund, which is in dispute over the management rights of Hanjin Kal with Chairman Cho Won-tae, will continue to oppose in the future acquisition process.
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