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| Korean Air headquarters in Seoul / Korea Times file |
Korean Air, Korea's biggest carrier, said Friday it will raise a higher than previously planned amount by selling stocks for its planned acquisition of smaller rival Asiana Airlines.
Korean Air plans to sell 3.3 trillion won ($3 billion) worth of new stocks, which is higher than the originally planned 2.5 trillion won to finance the acquisition of debt-laden Asiana, due to its soaring stock price, the company said in a regulatory filing.
The national flag carrier plans to issue 173.6 million shares at 19,100 won per share, which is higher than the originally planned 14,400 won. The price will be finalized on Feb. 26, the filing said.
Korean Air shares have jumped 28 percent this year through Friday to 34,950 won, far outperforming the broader KOSPI's 9.3 percent gain.
Out of the rights issue proceeds, Korean Air said it will spend 1.5 trillion won to buy Asiana and use the remaining 1.8 trillion won to pay back its debts.
Korean Air has been conducting due diligence on Asiana since December to look into Asiana's cost structure, contracts and other details as it is scheduled to come up with a post-merger integration plan by March 17.
To proceed with the deal, Korean Air submitted documents by Jan. 14 to antitrust authorities in the countries to which the carrier flies for review of the merger.
The countries include the United States, the European Union, China and Japan.
Korean Air expects no major problems in obtaining approval from overseas for the merger of the two airlines given that bigger merger deals went smoothly in the past.
Korean Air and Asiana account for a combined 40 percent of passenger and cargo slots at Incheon International Airport, South Korea's main gateway. It does not constitute a monopoly, the company said.
The two airlines have suspended most of their flights on international routes since March as countries strengthen their entry restrictions to stem the spread of the pandemic.
From January to September, Korean Air's net losses narrowed to 651.84 billion won from 707.14 billion won a year earlier as it focused on winning more cargo deals to offset dried-up travel demand.
But Asiana's net losses widened to 624 billion won in the first nine months from 524 billion won a year ago.
The carriers are expected to release their fourth-quarter and 2020 earnings results next month.
(Yonhap)
