3-Party Alliance: "Hanjin Kal, No Third-Party Allocation Rights Offering"

On the 27th, shareholders and executives moved inside the building at the 'Hanjin KAL 7th Regular General Meeting of Shareholders' held at the Hanjin Building Main Office in Jung-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Yoo Je-hoon] The shareholder alliance for the normalization of Hanjin Group (known as the '3-party alliance') has reportedly reiterated its position to Hanjin Kal that it supports the shareholder allocation method for Korean Air's rights offering but opposes the third-party allocation method. The second round of the Hanjin Group management rights dispute is intensifying.

According to industry sources on the 27th, the 3-party alliance sent a certified letter containing this message to Hanjin Kal. The 3-party alliance consists of former Korean Air Vice President Cho Hyun-ah, private equity fund (PEF) KCGI, and Bando Construction.

KCGI, one of the entities in the 3-party alliance, had previously sent a certified letter with the same key message before the decision on Korean Air's rights offering, stating that it supports the shareholder allocation rights offering but opposes the third-party allocation rights offering.

The reason the 3-party alliance is reiterating this demand is interpreted as a consideration that the current tense shareholding structure could be disrupted if a third-party allocation accompanied by a 'white knight' occurs. So far, the friendly shares secured by both sides are at a similar level: 42.75% for the 3-party alliance and 41.15% for Chairman Cho Won-tae of Hanjin Group. There were also speculations the day before that Bando had additionally purchased 2% of shares.

Earlier, Hanjin Kal decided to participate in Korean Air's rights offering, which will be conducted on a scale of 1 trillion won, and planned to raise 300 billion won. However, as of the end of last year, the company's cash and cash equivalents amounted to about 140 billion won, which falls short of this amount.

Nonetheless, Hanjin Group maintains its policy to raise funds through asset and affiliate share collateral loans. A Hanjin representative stated, "There is no change in the existing position that we plan to secure funds through asset sales and secured borrowings."