Korean Air prices $3 bn right offering at 19,100 won apiece, overhang issue weighs stk

[Photo provided by Korean Air Lines Co.]

Korean Air Lines Co. priced its new shares in the country¡¯s biggest-ever rights offering of 3.3 trillion won ($2.94 billion) at 19,100 won apiece to finance the buyout of full-service rival Asiana Airlines Inc. with half of the sum.

According to the flag carrier's disclosure Tuesday, of the offering of 173,611,112 shares, 20 percent allocated to the employee shareholders¡¯ association can be subscribed on Thursday and existing shareholders including Hanjin KAL Corp. assigned with an estimated 41.88 million shares through 800 billion won financed from state lender Korea Development Bank (KDB) on the following day. Forfeited shares will be put up for public subscription on Sept. 9-10.

Of the 3.3 trillion won in new capital, 1.5 trillion won will go to the buyout of Asiana Airlines and the rest to pay off debt. The company had issued 1.13 trillion won rights offering in July 2010 to survive the pandemic crisis.

The new shares carry a premium of near 48 percent from the stock¡¯s Friday closing of 28,150 won, but their price could be weighed down by overhang issue as the additions would nearly double the outstanding shares currently at 174.2 million.

Even taking into account of the general one-year lockup for the majority shareholders, as many as 90 million could be exchanged. The new shares join the market on March 24.

On Tuesday, shares of Korean Air closed 2.13 percent lower at 27,550 won.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]