Acquisition of Air Seoul Shares Worth 180 Billion KRW
Purchase of New Perpetual Convertible Bonds Worth 100 Billion KRW from Air Busan
On May 13, Asiana Airlines announced that it would provide financial support to its affiliated low-cost carriers (LCCs), Air Seoul and Air Busan, through measures such as acquiring shares and purchasing perpetual convertible bonds (CBs) to improve their financial structures.
On this day, Asiana Airlines disclosed that it would participate in Air Seoul's paid-in capital increase by acquiring an additional 36 million shares for 180 billion KRW. The scheduled date for the share acquisition is May 14.
Asiana Airlines explained that this share acquisition would improve Air Seoul's financial structure and enable the company to continue its business operations in a stable manner.
Air Seoul fell into a state of complete capital erosion in 2019 and received an order from the Ministry of Land, Infrastructure and Transport to improve its financial structure in May 2023. At the time, the improvement order was delayed by about three years in consideration of the COVID-19 situation. According to the Aviation Business Act, the Ministry of Land, Infrastructure and Transport may issue an order to improve the financial structure of an airline if its capital erosion rate exceeds 50% for more than one year or if it falls into complete capital erosion. If the airline does not comply, its license may be revoked.
Additionally, on the same day, Asiana Airlines announced a decision to conduct a capital reduction for Air Seoul to improve its financial structure by offsetting its accumulated deficits. The capital reduction will consolidate eight common shares into one common share with the same par value of 5,000 KRW. The record date for the capital reduction is May 28.
Asiana Airlines also disclosed on this day that it had decided to acquire perpetual CBs worth 100 billion KRW issued by Air Busan.
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