Hanjin Group: "Third-Party Allocation Capital Increase Is Legal... KCGI Should Stop Shaking the Survival of Key Industries"

"KCGI, Private Equity Fund for Minority Investors' Profit... No Room to Intervene in Issue Affecting 100,000 Jobs"

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] On the 23rd, Hanjin Group responded to the private equity fund (PEF) KCGI's injunction request to prohibit the issuance of new shares related to Hanjin KAL's third-party allotment capital increase for the acquisition of Asiana Airlines, stating that it is a "lawful procedure in line with business purposes" and urged to "stop the irresponsible behavior that shakes the survival of the national key industry."

Hanjin Group released a statement on the same day, saying, "The unfortunate precedent where Korea's shipping industry practically collapsed due to the bankruptcy of Hanjin Shipping a few years ago must not be repeated in the aviation industry."

Regarding the acquisition of Asiana Airlines, Hanjin Group said, "This decision is part of the industrial restructuring process inevitably made for the survival of the national airline, and it was a magnanimous decision made by Hanjin Group accepting the proposal of KDB Industrial Bank, the representative of creditors, recognizing this reality."

Hanjin Group continued, "Considering the severe crisis faced by Korea's two major airlines under the COVID-19 pandemic, it is difficult to survive without extraordinary industrial restructuring measures," emphasizing, "In particular, this acquisition decision is a desperate issue involving the jobs of about 100,000 employees working at both companies and their partner companies, and if the acquisition fails, there is a high possibility of facing a serious employment crisis."

Regarding KCGI's claim that the third-party allotment capital increase for defending management rights is illegal, Hanjin Group reiterated, "It is a lawful procedure based on the 'necessity to achieve business purposes' stipulated in Article 418 of the Commercial Act and Article 165 of the Capital Market Act," adding, "The Supreme Court has also ruled that third-party allotment capital increases within the scope prescribed by the articles of incorporation are lawful even in management disputes."

On the claim that a rights offering should be conducted, Hanjin Group stated, "It is doubtful whether major shareholders have additional acquisition capacity, and considering that the price of forfeited shares is excessively high compared to value, it is practically impossible," emphasizing, "From the perspective that urgent financial support is needed for both companies, the rights offering method, which takes 2 to 3 months, is not suitable."

Hanjin Group also criticized KCGI, saying, "It is a private equity fund that seeks to maximize private profits with investors' money without spending a single penny of its own," and added, "A private equity fund whose purpose is the private interests of minority investors has no place to interfere in important decisions involving the survival of the national key industry of aviation and the jobs of about 100,000 people."

Hanjin Group concluded, "KCGI's injunction request is extremely irresponsible as it made no sacrifices or efforts to share pain when the company's survival was at risk due to COVID-19 and failed to present alternatives for the aviation industry," and expressed hope that "the court will reach a prompt and reasonable conclusion."

This content was produced with the assistance of AI translation services.