Eastar Jet to Find New Owner Within This Month

Participation of Harim and Ssangbangwool Group
Debt of around 200 billion won poses a challenge

[Asia Economy Reporter Dongwoo Lee] As expectations for the normalization of the aviation industry next year grow, Eastar Jet, which is currently undergoing corporate rehabilitation proceedings (court receivership), is expected to find a new owner as early as this month.

According to the aviation industry on the 1st, Deloitte Anjin Accounting Firm, the sales agent for Eastar Jet, received letters of intent (LOI) from prospective buyers until the day before.

The party that participated in the Eastar Jet LOI submission process is Pan Ocean, a subsidiary of Harim Group. Harim has an annual sales of 2 trillion KRW and assets worth 10 trillion KRW, and acquired Pan Ocean in 2015. Pan Ocean holds net cash of about 190 billion KRW as of the end of last year and operates a bulk carrier business transporting iron ore, coal, grains, and more.

The industry expects that if Harim acquires Eastar Jet, the synergy effect in the logistics sector through shipping and aviation industries will be maximized. It is judged that the logistics business can be expanded through Eastar Jet’s short- and medium-haul routes to Japan, Southeast Asia, and other regions.

Besides Harim, Kwanglim, an affiliate of Ssangbangwool Group that manufactures cranes and special vehicles, and some private equity funds are also reported to have entered the acquisition battle. If the acquisition of Eastar Jet is successfully completed, the restructuring of the domestic low-cost carrier (LCC) market is expected to accelerate.

Eastar Jet plans to conduct preliminary due diligence from today until the 7th for prospective bidders who submitted LOIs, and then receive bidding documents stating the sale price on the 14th. The sale will be conducted as a public competitive bidding with a conditional prospective buyer.

Eastar Jet will select the acquirer by evaluating items such as the scale of the bid amount, the method of capital investment, and proof of fund procurement. The bid amount is known to have the highest score among the evaluation criteria. In addition, the company plans to evaluate the appropriateness of the bidder’s management plan, the guarantee and succession of employee employment, business plans including long-term vision, and conditions for employment stability programs.

However, the debt of about 200 billion KRW held by Eastar Jet is a variable. Currently, Eastar Jet’s passenger operations are temporarily suspended, and the debt size continues to increase. In particular, the priority repayment items such as employee wages and taxes are known to amount to hundreds of billions of KRW.

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