Jeju Air has delayed acquiring a majority stake in compatriot Eastar Jet by yet another month, again citing the due diligence process.
“There are no issues with the process [and the delay] is just about the shortage of time. We expect to close the deal in February,” Jeju tells Cirium.
It announced on 18 December that it would acquire a 51% stake in the smaller Eastar for W69.5 billion ($58 million). The carriers signed a memorandum of understanding on 26 December and expected to seal a contract by year-end.
At the end of December, Jeju announced that the expected completion of the stock sale and purchase contract was pushed back from 9 January to the end of January. It now expects this to close by the end of February.
To fund the acquisition of 4.9 million Eastar shares, Jeju is issuing a W10 billion convertible bond that offers nearly 1.5% of its own share capital at maturity, with a five-year tenor and bearing 1% coupon.
It also guarantees the performance of the memorandum of understanding signed by both carriers for W11.5 billion, a sum that will be included in the sale price upon conclusion of the agreement.
