NPS Holds 8.11% Stake in Korean Air

Korean Air and Asiana Airlines aircraft at Incheon International Airport

The National Pension Service (NPS) announced on Jan. 5 that it has decided to veto Korean Air’s acquisition of Asiana Airlines.

“Korean Air made the decision without due diligence and the contract may be disadvantageous for Korean Air with regard to potential contract cancellation attributable to Asiana Airlines, which implies potential damage to shareholder value on Korean Air’s part,” the NPS explained.

Korean Air is planning to change the number of issued shares from 250 million to 700 million by changing its articles of association and then prepare acquisition and operating costs by paid-in capital increase through third-party allocation. Specifically, Hanjin KAL is planning to join the 2.5 trillion won capital increase with the Korea Development Bank backing and Korean Air is planning to become the largest shareholder by spending 1.8 trillion won for new share and bond acquisition.

The shareholding of the NPS in Korean Air was 8.11 percent as of November last year. This means the effect of the veto may be rather limited at the upcoming extraordinary shareholder meeting. Korean Air can do what it is planning to do once at least two-thirds of shareholders in attendance give their consent.

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