The three-way alliance led by Hanjin Group heiress Cho Hyun-ah challenging the Hanjin Group management under her brother Cho Won-tae on Thursday disclosed it would go after warrants for 1.2 million new issues from Hanjin KAL Corp to defend their stake in the parent of South Korea’s flag carrier Korean Air Lines.
According to the disclosure, Grace Holdings, a wholly-owned subsidiary of homegrown activist fund Korea Corporate Governance Improvement (KCGI) and mid-sized builder Bando Engineering & Construction aim to buy 800,000 and 400,000 warrants, respectively, at 25,000 won apiece, higher than the market value.
The amount represents 33 percent of all available warrants.
Hanjin KAL early this month sold 300 billion won ($250 million) in bonds with warrant to support the $800 million recapitalization scheme of Korean Air Lines under virus-led liquidity crisis.
The three-year bonds with warrant carry an option for early repayment, which allows investors the choice to either buy shares of Hanjin KAL at the preset price or sell them back to the market.
(From left) Hanjin Group heiress Cho Hyun-ah, KCGI CEO Kang Sung-boo and Bando Engineering & Construction Co. Chairman Kwon Hong-sa.
With the acquisition of warrants, the challenging front is able to maintain current holding of 45.23 percent in Hanjin KAL. If the chief and his allies do nothing with a combined 41.3 percent, the gap between their ownership will be widened.
Grace Holdings and Bando E&C said its aim is to avoid share dilution following new issues and gain control over the company to improve the group governance structure.
Separately, Chairman Cho Won-tae announced on the same day he has taken out a 20 billion won loan based on his holding of 700,000 shares. It was for personal reasons, said Korean Air Lines, but industry insiders suspect he was going after warrants.
Hanjin KAL shares on Friday fell 1.23 percent to 88,000 won at 1:10 p.m., and Korean Air Lines down 1.34 percent to 18,350 won.
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]