MIAMI – Seoul Central District Court yesterday ruled in favor of the merger of Korean Air (KE) and Asiana Airlines (OZ). The decision will make the acquisition easier.
Last month, KE was set to buy its biggest rival for ₩1.8tn. Due to the pandemic, both airlines were making losses. The merger was an “inevitable decision according to Kim Sang-do, the Korean Deputy Minister for Civil Aviation.
The Court Case
Three shareholders of KE-parent Hanjin Kal sued as they feared that the stock placement would dilute their stakes. Also, they believed that it would benefit Walter Cho, the Chairman of Hanjin Kal and CEO of KE.
The deal includes that Korean Development Bank (KDB), which is the main creditor of OZ would inject ₩800bn to Hanjin Kal. If the Court decided in favour of the demandants, it would mean the collapse of the merger. In that case, KDB should have inejcted more money to avoid OZ’s demise.
The Court ruled that the share sale’s purpose is the merger of the two airlines. They don’t believe that the KDB’s hanjin Kal investment would change the shareholding structure in contrary to the demandants’ fears.
The demandant alliance included Walter’s sister, Heather Cho in addition to Bando and Korea Corporate Governance Improvement fund. The three parties take up to 45,2% Hanjin Kal shares. They wanted Hanjin Kal to sell non-core parts. The group granted the wish and promised extra transparency in the management.
Korean Air had suffered scandals previously because of Heather Cho and her father. In 2014, she ordered a flight back to the gate in New York (JFK), because she was dissatisfied with how the Flight Attendants served nuts. She assaulted and ordered the Chief FA off the plane. She was convicted and served five months in prison.
Their dad, Cho Yang-Ho was ousted from KE in 2018 following controversies. His younger daughter, Emily allegedly threw a drink at two people on a business meeting. The involved attendees did not want to sue Emily. Yang-Ho also had a company, which through KE brokered aircraft equipment and duty-free goods, making plus money for him. He died last April in the US, aged 70.
Walter Cho climbed through managerial positions and became Chairman following the death of his father. He is also a member of IATA and Chairman of SkyTeam Alliance Board.
Featured mage source: Nick Sheeder