Korean Air said in a regulatory filing on 22 January that it plans to raise at least 3.3 trillion won (US$3 billion” by selling news shares to help complete its planned takeover of Asiana Airlines. This is higher than the original 2.5 trillion won it planned to sell to finance the acquisition of debt-laden Asiana, due to its soaring stock price, the company said.
The national flag carrier plans to issue 173.6 million shares at 19,100 won per share, which is higher than the originally planned 14,400 won. The price will be finalised on 26 February. Out of the rights issue proceeds, Korean Air said it will spend 1.5 trillion won to buy Asiana and use the remaining 1.8 trillion won to pay back its debts. Korean Air has been conducting due diligence on Asiana since December to look into Asiana’s cost structure, contracts and other details as it is scheduled to come up with a post-merger integration plan by 17 March.
Korean Air said it expects no major problems in obtaining approval from overseas for the merger of the two airlines given that bigger merger deals went smoothly in the past. Korean Air and Asiana account for a combined 40 percent of passenger and cargo slots at Incheon International Airport, South Korea’s main gateway. It does not constitute a monopoly, the company said.
The two airlines have suspended most of their flights on international routes since March as countries strengthen their entry restrictions to stem the spread of the COVID-19 pandemic.
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