The planned acquisition of fellow South Korea-based airline Asiana by Korean Air has taken a step forward after a Seoul court rejected an injunction to block the move.
In a ruling on Tuesday, the Seoul Central District Court denied the injunction filed by activist fund KCGI – the largest shareholder of Korean Air's parent company Hanjin KAL. In response, Asiana's main creditor – state-owned Korea Development Bank (KDB) welcomed the ruling and called on KCGI to support their side of the deal.
“The case involving issuance of new shares is in accordance with the commercial law and Hanjin KAL’s articles of incorporation and has been done within necessary boundaries to achieve the goal of managing a consolidated airline,” the Seoul Central District Court ruling stated.
In response, Korean Air's parent company Hanjin KAL was quoted on a Korea Herald Report stating it will “put their best efforts into overcoming the crisis, strengthening competitiveness and ensuring job stability.”
The Seoul-based airline plans to acquire a majority 63.9% stake in Kumho Group-owned Asiana through a purchase of KRW 1.5 trillion won and KRW 300 billion of its corporate bonds. To facilitate the move, Korean Air will raise KRW 2.5 trillion won from shareholders, while state-run Korea Development Bank would invest KRW 800 billion in Korean Air's parent company Hanjin KAL.
Following the court decision, Korean Air will also have to secure approval from anti-trust regulators in the United States, European Union, China and Japan before proceeding with the acquisition.