Notification of Acquisition Decision to Rehabilitation Court
Ssangbangwool Must Submit Identical Bid Price
On the 23rd, when Jeju Air announced the termination of the stock purchase agreement for acquiring management rights of Eastar Jet, effectively giving up the acquisition, a sense of silence prevailed at Eastar Jet's headquarters in Gangseo-gu, Seoul. Photo by Jinhyung Kang aymsdream@
[Asia Economy Reporter Dongwoo Lee] The new owner of Eastar Jet, which is undergoing corporate rehabilitation procedures, will be virtually decided on the 18th.
According to industry sources on the 16th, Seongjeong Co., Ltd., which holds the right of first refusal for Eastar Jet, must notify the Seoul Bankruptcy Court by the 18th whether it will proceed with the acquisition. The court plans to send an official letter to Seongjeong on that day to confirm whether it will exercise the purchase right for Eastar Jet.
Seongjeong, a golf course management and real estate rental company, signed a 'conditional investment contract for mergers and acquisitions (M&A)' prior to the Eastar Jet bidding announcement. Therefore, if it offers the same amount as Ssangbangwool Group, which participated in the main bidding, it can ultimately acquire Eastar Jet.
Previously, Eastar Jet proceeded with the sale using the 'stalking horse' method, granting Seongjeong the right of first refusal and then conducting a separate public competitive bidding. Subsequently, Ssangbangwool Group submitted a sole bid in the main M&A bidding for Eastar Jet, becoming the final acquisition candidate along with Seongjeong.
While Ssangbangwool Group is reported to have offered an acquisition amount in the 110 billion KRW range in the main bidding, the industry expects Seongjeong to acquire Eastar Jet by investing about 10 billion KRW more than the acquisition amount (approximately 100 billion KRW) it proposed at the time of the conditional investment contract.
In fact, Seongjeong is known to have had a strong interest in the airline industry, to the extent that it considered investment in the establishment of the airline back in 2006 before Eastar Jet was founded. Headquartered in Buyeo, Chungcheong Province, Seongjeong is engaged in golf course management, real estate rental, and real estate development, and expects the airline business to create synergy with its existing operations.
As of last year, Seongjeong recorded sales of about 6 billion KRW, and its affiliates, Baekje Country Club (a golf course) and Daeguk Construction Industry (a civil engineering company), posted revenues of 17.8 billion KRW and 14.6 billion KRW respectively during the same period.
Some in the industry speculate that Seongjeong's relatively small scale may make it difficult to raise additional investment funds, but it is reported that Seongjeong is currently securing funds based on the capital strength of the owner family. If Seongjeong fails to meet the final acquisition price and gives up, the new owner of Eastar Jet will go to Ssangbangwool Group.
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