Asiana Airlines held an extraordinary shareholders meeting Monday, and voted to raise capital by increasing shares and issuing convertible bonds.
The South Korean flag carrier put to a vote its decision to revise its articles of association, calling for an increase in the total number of issued shares and a higher limit on CBs. The amendment was passed with the approval of all shareholders present.
With the shareholders’ approval, Asiana will increase the total number of its shares to 1.3 billion from 800 million, while also raising its limit on CBs from 700 billion won ($578 million) to 1.6 trillion won.
Asiana Airlines CEO Han Chang-soo said at the meeting, “The airline industry as a whole is having a difficult time from the first quarter of this year to the present due to COVID-19.
“This revision is to prepare for the need to increase capital in the aftermath of the pandemic.”
Han added, “Based on the experience and capabilities accumulated by Asiana Airlines over the past 32 years, all executives and employees will do their best to maximize the interests of shareholders and company stakeholders by overcoming the crisis and enhancing corporate value.”
For the resolution to pass, more than one-third of all shareholders needed to be present and more than two-thirds of those with voting rights had to approve it. The voting was done electronically.
However, market analysts were split on whether the move is a positive sign for the ongoing negotiations for Asiana’s sale to the HDC Hyundai Development Company.
Last week, HDC, the preferred bidder, told creditors including the state-run Korea Development Bank to reexamine the acquisition deal, citing an increase in the debt-equity ratio.
HDC said Asiana was pushing ahead with changing the articles of association and holding an extraordinary shareholders meeting so that it could borrow additional funds and provide financial support to insolvent units despite disagreement from the consortium that won the acquisition bid, which also includes Mirae Asset Daewoo.
In response, Asiana said it had fully explained its latest moves to HDC in accordance with the contract.
As of the first quarter of this year, Asiana’s debt-to-equity ratio stood at 6,280 percent, 4.5 times higher than the 1,387 percent posted in the previous quarter.
By Shin Ji-hye (email@example.com