- California Assembly OKs highest minimum wage in nation
- S. Korea unveils first graphic cigarette warnings
- US joins with South Korea, Japan in bid to deter North Korea
- LPGA golfer Chun In-gee finally back in action
- S. Korea won’t be top seed in final World Cup qualification round
- US men’s soccer misses 2nd straight Olympics
- US back on track in qualifying with 4-0 win over Guatemala
- High-intensity workout injuries spawn cottage industry
- CDC expands range of Zika mosquitoes into parts of Northeast
- Who knew? ‘The Walking Dead’ is helping families connect
Korean Air to sell assets
By Kim Tae-jong
Korean Air, the flagship unit of Hanjin Group, said Thursday it will sell assets to raise 3.5 trillion won ($3.3 billion) as part of efforts to tackle a liquidity shortage and support its cash-stripped sister firm.
The plan was agreed to at an emergency meeting of its board directors as it had been long required to come up with a self-rescue plan and lower its high debt ratio by financial regulators and its main creditor bank.
The airline plans to sell 30 million shares of refiner S-Oil to raise 2.2 trillion won, dispose of 13 older aircraft for 250 billion won, and sell property and other assets for 1.04 trillion won.
Through the sales of its assets, it aims to lower its debt-to-equity ratio to 400 percent by 2015 from the current 800 percent.
“We decided to enhance our financial health ㅡ although the debt ratio is not critical in the management of the airline business ㅡ because of the financial authorities’ stricter monitoring following Tongyang’s bankruptcy,” said Lee Sang-gyun, vice-president of Korean Air.
But he stressed that the firm will continue to buy 10 new airplanes per year to enhance the quality of customer services
The company also announced it will offer an additional 100 billion won to Hanjin Shipping on the condition that banks provide the shipping firm with 300 billion won to cover debts which mature in three years or longer.
The country’s biggest container carrier by sales had a debt-to-equity ratio of 987 percent and 9.47 trillion won (about $9 billion) in total debt as of the end of September. It has 1.07 trillion won in corporate debt maturing by 2015.
In October, Korean Air said it would provide 150 billion won to Hanjin to help ease the company’s “temporary” liquidity shortage. In return for the emergency loan, the airline took a 15.4 percent stake in the shipping affiliate, held by Hanjin Holdings as security.
The airline is the biggest shareholder of Hanjin Shipping Holdings, the holding company that owns the largest stake in the shipping line.
The airline also announced it will participate in Hanjin Shipping’s capital increase estimated at 400 billion won early next year, by buying its new stocks, also part of its support measures. The purchase will see it become the largest shareholder of the shipping firm.