Results Expected as Early as the 30th, No Later Than the 1st
Acquisition Fails if Quoted... Smooth Acquisition Process if Dismissed
[Asia Economy Reporter Yu Je-hoon] The court's decision on Korean Air's first hurdle in acquiring Asiana Airlines is imminent. The result of the injunction request to prohibit Hanjin KAL's third-party allotment capital increase filed by private equity fund (PEF) KCGI is expected as early as the 30th, or by the 1st of next month at the latest. As Hanjin Group and KCGI exchange arguments calling it a "decision to protect national key industries and jobs" and a "special favor," attention is focused on whose side the court will take.
According to the aviation industry on the 29th, the Seoul Central District Court Civil Division 50 (Chief Judge Lee Seung-ryeon) will deliver a conclusion next week on KCGI's injunction request to prohibit the issuance of new shares against Hanjin KAL. Earlier, on the 25th, the Seoul Central District Court summoned representatives from both sides, completed the injunction hearing, and is now in the final deliberation stage.
Both sides have already emphasized the legality and illegality of this third-party allotment capital increase through a public battle. KCGI stresses that a third-party allotment capital increase in a management dispute situation does not meet the conditions stipulated by the Commercial Act. On the other hand, Hanjin argues that this aviation industry restructuring corresponds to the company's "business purposes" as defined by the Commercial Act, such as introducing new technologies and improving financial structure.
Both sides are engaged in a sharp battle of nerves ahead of the injunction result. Hanjin Group stated today, "If the injunction is granted, the aviation industry will collapse. The jobs of over 100,000 people are more important than the interests of private equity funds," raising their voices by saying, "KCGI's shareholder allotment capital increase and Hanjin KAL's asset sales are unrealistic."
KCGI also countered, saying, "If the Korea Development Bank (KDB) wants to support Hanjin KAL, it should provide loans secured by real estate owned by the group, not a third-party allotment capital increase," and added, "It is appropriate to participate in Korean Air's capital increase so that Korean Air can acquire Asiana Airlines."
If the injunction request is granted, it will be a major adverse factor for KDB and Hanjin Group; if dismissed, it will be a significant setback for the third-party coalition led by KCGI. First, if the injunction is granted, Korean Air's acquisition of Asiana Airlines is likely to be effectively nullified. Conversely, if dismissed, Korean Air's acquisition of Asiana Airlines will gain momentum, but the third-party coalition is generally assessed by the industry as having no suitable means to use.
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