Hahn & Co finances $700 mn Korean Air deal with about $400 mn debt

Hahn & Co., a South Korean private equity firm, has completed the payment for the 790 billion won ($722 million) purchase of Korean Air Lines' inflight catering and duty-free businesses, after raising more than 400 billion won ($366 million) in debt financing, according to investment banking sources on Dec. 17.

NH Investment & Securities Co. led the debt package for the deal, part of which Hahn & Co. financed with its blind pool fund. No further details on the financing were disclosed.

Under an agreement signed in August, Hahn & Co. acquired an 80% stake in a special purpose company (SPC) that owns the inflight service operations of the flag carrier. Korean Air has taken the remaining 20% of the SPC.

The deal valued the inflight services at 990.6 billion as a whole. The SPC will enter into a 30-year service agreement with Korean Air.

The inflight services are expected to benefit substantially from the planned combination of Korean Air of Asiana Airlines Inc. Earlier this month, a Seoul district court removed a key hurdle for the $1.6 billion union, poised to become the world’s seventh-largest carrier.

The deal closing took place after Hahn & Co. raised $3.2 billion for two funds focused on South Korea last year. The Seoul-based PEF, founded by ex-Morgan Stanley banker Scott Sang-Won Hahn, manages around $7 billion in assets.

OTHER ASSETS UP FOR SALE

Separately, another Seoul-based PEF, Keistone Partners, is in the final stages of talks to buy the airport limousine bus operator of the Hanjin Group, parent of Korean Air, for around 20 billion won.

As part of self-rescue efforts, the group recently sold Wangsan Leisure Development, a domestic yacht marina operator, to a Korean consortium of Consus Asset Management and Mirae Asset Daewoo Ltd.

It has also put up for sale Wilshire Grand Center, a landmark building in Los Angeles fully owned by Hanjin International Corp. to ease liquidity problems caused by travel restrictions in the prolonged pandemic era.

Hanjin Group is likely to dispose of additional assets, including hotels and real estate at home and abroad, to shore up its bottom line, according to the industry watchers.

Its planned sale of undeveloped land in central Seoul has been put on hold after the Seoul Metropolitan Government announced a plan to buy it for 467.1 billion won on condition of two-year installment payments.

Write to Chae-Yeon Kim and Sang-eun Lucia Lee at why29@hankyung.com
Yeonhee Kim edited this article.