Korean Air (KE, Seoul Incheon) has decided to sell non-core assets to improve its finances as its new board chairman tries to rally shareholder support in a brewing proxy battle with his sister, Seoul Economic Daily and the business news site Pulse reported.
On February 6, the board revealed plans to sell the company's wholly-owned Wangsan Leisure Development, which operates the Wangsan Marina leisure facility close to Incheon Airport (completed in 2017, it is the country's largest private marina complex) and a 36,640-square-metre plot of vacant land and a building in Songhyeon-dong, central Seoul, by the end of the year.
The sale of such non-profitable, non-core assets represents “efforts to improve its financial health”, the airline explained.
Cho Won-tae, who took over the Hanjin Group conglomerate that owns Korean Air last April after his father’s death, has been challenged by his older sister Cho Hyun-ah, who has been gathering support to appoint a professional chief executive to run the conglomerate and boost its flagging share prices.
The asset sale has been seen as the incumbent’s effort to appease shareholders ahead of a Hanjin Group meeting on March 24 in which he is up for re-election. The activist hedge fund Korea Corporate Governance Improvement (KCGI), Hanjin's second-biggest shareholder, has staged attacks against the airline's management policy over the last year and intends to overthrow him.
KCGI has been vocal in urging the sale of the Songhyeon-dong site, estimated to be worth at least KRW500 billion won (USD421 million). Hanjin Group had intended to sell it by the end of 2019 but failed due to disagreements with would-be buyers.
Selling off Wangsan Leisure Development is more of a surprise, but, as previously reported, Cho Won-tae signalled an intention in November to “shed all non-core assets.” It had been headed by Cho Hyun-ah until her resignation in 2014 in the wake of the “nut rage” scandal in which she shouted at Korean Air cabin crew over how her nuts were served. The Songhyeon-dong site, meanwhile, had originally been intended for a hotel business run by the heiress.
