Hanjin Group "If Injunction Is Granted, Aviation Industry Will Collapse... 100,000 Jobs at Stake"

"Rights Offering to Shareholders and Issuance of Non-Voting Preferred Shares Lack Practicality"

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] Hanjin Group appealed on the 25th regarding the provisional injunction filed by the private equity fund (PEF) KCGI against Hanjin KAL to prohibit the issuance of new shares, stating, "If it is granted, the South Korean aviation industry will collapse," and "The jobs of over 100,000 people in the aviation industry are far more important than the profits of the PEF."

Hanjin Group released a statement on the same day, saying, "The contract between KDB Industrial Bank and Hanjin KAL stipulates that the successful capital increase is the primary precondition for Korean Air's acquisition of Asiana Airlines, so if the injunction is granted, the acquisition will be fundamentally impossible."

Hanjin Group added, "If the acquisition fails, it will also be impossible to urgently raise 600 billion won needed by Asiana Airlines," and "As a result, a downgrade in credit rating, a chain loss of benefits of maturity on various debts, designation as a management item due to capital erosion, and license cancellation could follow, potentially leading to a large-scale unemployment crisis."

Regarding KCGI's proposal to KDB to issue non-voting preferred shares, Hanjin Group said, "This is a method that KDB cannot accept because it is difficult to guarantee integrated management and early normalization of the merged airline due to the lack of voting rights, and it is nothing but nonsense," and criticized, "KCGI does not even properly understand the purpose of KDB's common stock holdings and is nothing more than an amateur speculative force in the aviation industry and industrial restructuring."

Regarding KCGI's suggestion of a rights offering followed by a general public offering of forfeited shares, Hanjin Group said, "This is an illogical claim. Funds must be injected into Asiana Airlines by the end of the year, and this method makes fundraising impossible," and added, "In the case of listed companies, if forfeited shares occur, issuance must be withdrawn according to the Capital Market Act, so this is an unreasonable argument."

Hanjin Group stated, "KCGI claims that acquisition funds can be raised through rights offerings, loans, and asset sales, but this is a story that does not understand reality. Even now, due to the COVID-19 pandemic, it is difficult to find appropriate investors," and "If KCGI is a proper private equity fund that collects and manages investors' funds, shouldn't it have that level of expertise and information?" they questioned.