Korean Air (KE, Seoul Incheon) decided at a board meeting on May 13 to prepare to issue around KRW1 trillion won (USD817 million) in new shares and a non-guaranteed convertible bond worth KRW300 billion (USD245 million) to raise funds and repay debts.
To be listed on July 29, exactly 79,365,079 newly issued shares with an expected price per share of KRW12,600 (USD10.30) will initially be offered to shareholders - including Hanjin KAL which holds a 30% stake in the airline - followed by the general public, the company outlined in a statement.
“Korean Air is making various efforts to overcome a business environment worsened by Covid-19,” the statement said.
It is the company's biggest rights issue in 20 years, according to the Reuters news agency.
Separately, as previously reported on April 24, the carrier is preparing to receive KRW1.2 trillion won (USD979 million) in support from South Korea's two state-owned lenders, the Korea Development Bank (KDB) and the Export-Import Bank of Korea (Exim Bank).
About 70% of Korean Air's employees working in South Korea embarked on a six-month leave of absence in April and all executives have taken a 50% pay cut.
In addition, the company has chosen a preferred bidder to buy its non-core assets, which include real estate in central Seoul and a leisure company that operates Wangsan Marina, a resort in Incheon, all of which some analysts value at KRW400-500 billion (USD326-408 million).
At the end of 2019, Korean Air had a debt-to-equity ratio of about 870%. A spokeswoman told Reuters that it was currently operating 10% of its international schedules - to rise to 20% in June - and 60% of its domestic schedules.
