Opposition to National Pension Service Bylaw Amendment... Korean Air "Doing Our Best to Convince Shareholders"

As the court's decision on Korean Air's acquisition of Asiana Airlines approaches, on the 30th, Korean Air and Asiana Airlines passenger planes were moving toward the runway at Gimpo Airport apron in Gangseo-gu, Seoul. The Seoul Central District Court is expected to deliver a ruling on the injunction request filed by the activist private equity fund KCGI against Hanjin KAL to prohibit new share issuance either today or tomorrow. If the court dismisses the injunction request, the acquisition process will accelerate, but if the injunction is granted, the acquisition is likely to be canceled. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Yoo Je-hoon] The National Pension Service (NPS) has decided to vote against the proposed amendment to the articles of incorporation at the Korean Air extraordinary general meeting of shareholders scheduled for tomorrow (the 6th), posing an obstacle to the Asiana Airlines acquisition battle. Korean Air stated, "We will do our best to persuade the shareholders."

According to the financial investment industry on the 5th, the NPS Stewardship Responsibility Committee (Stewardship Committee) reviewed the proposal to amend the articles of incorporation at Korean Air's extraordinary general meeting (expanding the total number of issued shares from 250 million to 700 million) during a morning meeting and decided to exercise its voting rights against it. The NPS is the second-largest shareholder of Korean Air, holding an 8.11% stake.

Since deciding to acquire Asiana Airlines last year, Korean Air planned to secure 2.5 trillion KRW through a paid-in capital increase in March and intended to handle the expansion of the total number of issued shares at this extraordinary general meeting. As a special resolution matter, the amendment to the articles of incorporation requires approval by at least two-thirds of the voting rights of shareholders present at the meeting and at least one-third of the total issued shares to pass.

Therefore, if this amendment is rejected at the shareholders' meeting, Korean Air's paid-in capital increase and the new share acquisition of Asiana Airlines will inevitably face setbacks. However, many in the industry predict that even if the NPS opposes, its actual influence on the voting outcome will be limited. This is because the largest shareholder and related parties hold 31.13%, and the employee stock ownership association holds 6.39%. Unlike during the Hanjin KAL management rights dispute, the NPS is not playing a casting vote role, which adds weight to this interpretation.

Korean Air said, "This is an issue to enhance the competitiveness of the Korean aviation industry," and added, "We plan to do our best to persuade shareholders so that the amendment to the articles of incorporation can be smoothly approved before the extraordinary general meeting."

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