Korean Air Decides to Lend $950 Million to Hanjin International

$900 Million Debt Maturity Due Late This Month... COVID-19 Causes Refinancing Difficulties
Korean Air Temporary Fund Loan "Most Recovered Within One Year"

[Asia Economy Reporter Yoo Je-hoon] Korean Air announced on the 17th that it held a board meeting on the afternoon of the 16th at its Seosomun headquarters in Jung-gu, Seoul, where it reviewed and approved a fund lending plan worth approximately $950 million to its subsidiary Hanjin International (HIC).

HIC is a wholly owned subsidiary of Korean Air operating the Wilshire Grand Center in the United States. Although HIC's $900 million loan is due at the end of this month, it is facing refinancing difficulties due to reduced demand for hotels and offices amid the COVID-19 pandemic.

Accordingly, Korean Air decided to provide a temporary financial loan as a priority. Most of the loan is expected to be recovered within one year, with $900 million used to repay HIC's borrowings and $50 million allocated to cover operating funds due to the contraction in the hotel industry.

Of the loan amount, $300 million will be re-lent to HIC after Korean Air secures a loan from the Export-Import Bank of Korea by the end of this month. The company explained that this structure, where Korean Air passes on the loan, does not practically affect liquidity.

Additionally, Korean Air plans to recover $300 million by October through a bridge loan linked to the partial sale of HIC shares to local investors in the U.S.

The remaining amount is expected to be repaid when HIC obtains a secured loan at the time the hotel and real estate markets recover next year. A Korean Air official stated, "Most of the temporary loan is expected to be repaid within one year."