3-Party Alliance "Hanjin Kal BW Issuance Likely to Harm Existing Shareholders' Interests"

On the 27th, shareholders and executives are moving inside the building at the 'Hanjin KAL 7th Regular General Meeting of Shareholders' held at the Hanjin Building Main Office in Jung-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Yoo Je-hoon] The shareholder coalition for the normalization of Hanjin Group (also known as the 3-Party Coalition) stated on the 17th that the terms of the convertible bonds with warrants (BW) issuance proposed by Hanjin KAL are favorable to investors and likely to infringe upon the interests of existing shareholders.

In a press release on the same day, the 3-Party Coalition said, "Hanjin KAL initially claimed it would raise the necessary 300 billion KRW for Korean Air's rights offering through asset sales and asset-backed loans, but it has become clear that this was merely a stalling tactic."

The 3-Party Coalition pointed out, "The terms of this BW issuance are favorable to investors and likely to harm existing shareholders' interests," adding, "If the current management decided to issue BWs with the intention of increasing friendly forces by using the warrants, it could constitute a violation of the Capital Markets Act."

They continued, "If such intentions exist or if the warrants actually transfer to the current management's friendly parties, it could have the same effect as a third-party allotment rights offering aimed at increasing the current management's friendly shares," and stated, "The 3-Party Coalition will review the legal issues and respond firmly to any illegal matters."

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