Daemyung Sono Moves Toward Securing Management Rights of T'way Air (Comprehensive)

Negotiations on Stake with Largest Shareholder Yerimdang
T'way Air States "No Decision Has Been Made"

Daemyung Sono Group is reported to have gained the upper hand in the management rights dispute surrounding the domestic low-cost carrier (LCC) T'way Air.

According to the aviation industry and legal circles on the 17th, Sono International, a subsidiary of Daemyung Sono Group, withdrew all injunction applications for inspection and copying of the shareholder registry and agenda submission against T'way Air on the same day. The hearing scheduled for the 18th was canceled. A Sono International official explained, "We withdrew because we received positive feedback from T'way Air regarding the previously requested agenda."

Last month, Sono International began actively participating in management by demanding the replacement of the current management, including CEO Jeong Hong-geun, and raising funds through a paid-in capital increase at T'way Air. In this regard, they requested inspection and copying of the shareholder registry of T'way Air and asked for the agenda to appoint nine directors, including Chairman Seo Jun-hyeok of Daemyung Sono Group, to be submitted at the March regular shareholders' meeting.

Currently, the largest shareholder of T'way Air is Yerimdang and T'way Holdings, holding a 30.14% stake including related parties. The second-largest shareholder, Daemyung Sono Group, holds 26.77%, about 3 percentage points less. Daemyung Sono acquired shares of the private equity fund (PEF) operator JKL Partners in July-August last year, becoming the second-largest shareholder.

It is understood that both parties have been negotiating the sale of shares since the end of last year. In this context, Yerimdang, which has less financial power compared to Daemyung Sono, is interpreted to have chosen negotiations for selling its stake instead of a shareholders' meeting vote battle. If the negotiations are concluded, Daemyung Sono is expected to secure a majority (56.83%) including Yerimdang's stake in T'way Air.

Meanwhile, T'way Air stated that the share sale has not been finalized. In a disclosure clarifying rumors or reports on the same day, T'way Air said, "Our largest shareholder, Yerimdang, is negotiating the sale of management rights with Daemyung Sono, but nothing has been specifically decided yet." However, T'way Air's stock price fell 9.97% to 3,070 won in after-hours trading compared to the closing price of 3,410 won.