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Jeju Air to raise 170 bln won via stock sale amid virus woes

17:36 May 21, 2020

SEOUL, May 21 (Yonhap) -- Jeju Air Co., South Korea's biggest low-cost carrier, said Thursday it will raise 170 billion won (US$138 million) by selling stocks as part of self-help measures amid the new coronavirus impact on the airline sector.

The rights issue is one of the options that Jeju Air has reviewed to raise operating capital needed to ride out the COVID-19 crisis.

Shareholders of the budget carrier will be given the rights to buy stocks to be sold in July at 14,000 won per share. The new shares will be listed on Aug. 4, the company said in a regulatory filing.

Shares in Jeju Air closed at 19,600 won on the Seoul bourse on Thursday, up 2.08 percent from the previous session's close.

This file photo, provided by Jeju Air, shows a Jeju Air plane taking off at an airport in South Korea. (PHOTO NOT FOR SALE) (Yonhap)

In February, Jeju Air implemented an emergency management scheme to stay afloat, as the COVID-19 pandemic has brought most international flights to a halt amid growing fears over the virus.

Jeju Air already had all of its executives return at least 30 percent of their wages and all of its employees take paid leave from February

"The company is also considering selling airplane engines purchased for replacement and leasing them back to secure operating capital," a company spokesman said by phone.

Jeju Air swung to a net loss of 101.4 billion won (US$83 million) in the January-March quarter from a net profit of 42.1 billion won a year ago.

The budget carrier recently delayed its acquisition of smaller local rival Eastar Jet Co. from the originally scheduled April 29, as two foreign regulators are still reviewing their merger.

Vietnam and Thailand have yet to approve the combination of the two carriers.

Jeju Air signed a deal to acquire a controlling 51.17 percent stake in Eastar Jet from its parent Eastar Holdings Inc. for 54.5 billion won in March as part of its expansion strategy.

Once the two Southeast Asian countries approve the deal, South Korea's two state lenders -- the Korea Development Bank and the Korea Export-Import Bank of Korea -- are expected to inject 170 billion won into Jeju Air to help it continue operations amid virus woes.

AK Holdings, the holding firm of South Korean retail conglomerate Aekyung Group, holds a 59.93 percent stake in Jeju Air.

kyongae.choi@yna.co.kr
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