Korean Air has found buyers for its marina operations and airport bus services as Hanjin Group nears the end of its restructuring process, but the planned sale of the South Korean conglomerate’s remaining non-core assets may take more time to be monetized.
The airline, a subsidiary of holding company Hanjin KAL, said in filings last week that it had agreed to sell its 100% stake in Wangsan Marina to a consortium of Consus Asset Management and Mirae Asset Daewoo for 130 billion won ($120 million), and would offload a 100% stake in KAL Limousine to Keistone Partners for 30 billion won.
Observers were surprised, as many thought the sales could be delayed after several previous attempts went awry. Notably, the deals were announced just one day before the Seoul Central District Court dismissed a suit filed by Hanjin KAL’s largest shareholder group that aimed to prevent the firm from issuing new shares to secure funds for the acquisition of Asiana Airlines.
“I think (the sale announcement) clearly helped to support Hanjin KAL’s argument that the planned acquisition of Asiana is to improve the conglomerate’s operational efficiency through horizontal integration,” said an industry insider.
Wangsan Marina was founded in 2011 by late chairman Cho Yang-ho, who had focused on hotel and leisure businesses for future growth. The company also had the backing of Cho Hyun-ah, Cho Yang-ho’s eldest daughter, who now has joined forces with Hanjin KAL’s biggest shareholder, activist fund KCGI, to oust her younger brother and Hanjin chairman Cho Won-tae.
The sales of Wangsan Marina and KAL Limousine indicate Hanjin’s intention to exit hotel and leisure businesses, industry watchers said. Its hotel and leisure operations recorded combined operating losses of nearly 30 billion won in the first nine months of this year.
KAL Hotel Network, which is 100% owned by Hanjin KAL, is also looking for a buyer. But the company is unlikely to complete the sale anytime soon due to the declining valuation of hotel properties in the wake of the Covid-19 pandemic, industry watchers said.
Korean Air owns land where the Seoul Metropolitan Government wants to develop parks and cultural spaces. However, negotiations between the two sides have made little progress as they failed to agree on the price and terms. (Reporting by Ik-hwan Choi)