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| From left, Korean Air heiress Cho Hyun-ah, Hanjin KAL Chairman Cho Won-tae |
By Kim Hyun-bin
Korean Air's ambitious proposal to acquire Asiana Airlines is expected to build momentum after a local court dismissed an injunction request filed by Korea Corporate Governance Improvement (KCGI).
On Tuesday afternoon, the Seoul Central District Court said Hanjin KAL's share issuance worth 800 billion won ($723 million) to acquire Asiana Airlines has no legal problems. Currently, Korean Air operates 173 aircraft and Asiana has 86, so the combination of the fleets would add Korean Air to the global top 7 airliner in terms of capacity in passengers and cargo planes.
However, the ruling is a major blow to Korean Air heiress Cho Hyun-ah and her shareholder alliance with the KCGI and Bando Engineering & Construction, which tried to oppose her younger brother, Hanjin Group Chairman Cho Won-tae, from solidifying his grip over Korean Air through the Asiana acquisition under the government-led integration scheme.
Hanjin KAL could issue new shares to Korea Development Bank (KDB) and change the ownership structure to benefit and solidify the chairman's grip over the conglomerate.
KDB earlier said it will inject 800 billion won into Hanjin KAL to become a major shareholder, and with the money obtained Korean Air will put the funds toward acquiring Asiana Airlines worth 1.8 trillion won. Once the deal is sealed, Korean Air will become the largest shareholder of Asiana Airlines, inevitably changing Hanjin KAL's shareholder structure.
Currently, Chairman Cho, Delta and Cho's other family members hold a little over 41 percent of Hanjin KAL, but his sister and her allies have close to 47 percent. However, the deal would give KDB close to 11 percent of the stakes, leaving the sister's alliance with 40 percent and the chairman and his group with 33 percent.
KDB is known to side with Chairman Cho, and with its support he could obtain 44 percent to solidify his grip over the conglomerate.
Many industry watchers believe the sister's faction will try to buy more shares but it would not be enough to exceed Chairman Cho's stakes to hold control over the company, as Hanjin KAL's self-insurance employees association which has 3.7 percent of Hanjin stakes decided to side with the chairman in March.
"The fight amongst the Cho siblings is over. Cho Won-tae, with the backing of KDB and the employee insurance association, will hold over 47 percent. Hanjin Group employees voted to side with Cho during the shareholders meeting in March," an official familiar with the matter told The Korea Times. "There is a 7 percent gap for the sister's alliance to cover and not enough shares out in the market."
In March, the alliance failed to dethrone the chairman but aims to take another jab during Hanjin KAL's shareholders meeting in March next year.
