Korea's top air carrier Korean Air Lines Co. decided Monday to offer 300 billion won ($242 million) worth of new shares as collateral to receive fresh financial support from creditor banks as it seeks to tide over a liquidity crunch.
In April, the Korea Development Bank (KDB) and the Export-Import Bank of Korea (Exim Bank) decided to extend 1.2 trillion won in liquidity to the country's flag carrier hit by the new coronavirus pandemic.
Korean Air and its holding company Hanjin KAL Corp. held emergency board meetings and approved the self-rescue measure as the company seeks to sign an agreement with the creditor banks for capital injections.
Hanjin KAL, which holds a 29.96 percent stake in Korean Air, will purchase the new Korean Air common stocks worth 300 billion won, and they will be provided as collateral, Korean Air said in a regulatory filing.
The collateral will be provided in January 2022 unless Korean Air meets "specific" conditions by the end of next year, Hanjin KAL said in a filing.
Korean Air needs to raise at least 2 trillion won of capital by end-2021. The creditor banks reportedly want the air carrier to boost capital by at least 1 trillion won.
The creditor banks earlier requested that Korean Air submit self-rescue measures totaling more than 1.5 trillion won, including asset sales and capital increase.
The lenders will sign a deal with Korean Air to offer capital on Tuesday after their internal panels approve it. (Yonhap)