This article was published on Feb. 27, 2025, at 3:44 p.m. on the ChosunBiz MoneyMove site.
Daemyung Sonno Group has ultimately acquired T'way Air. It has signed a contract to acquire all equity in Tway Holdings, held by YeaRimDang, putting an end to the management dispute.
Daemyung Sonno aims to complete the acquisition of management rights by obtaining approval from the Fair Trade Commission before the regular shareholders' meeting in March. After bringing in nine members, including Chairman Seo Jun-hyuk, to the board of directors, they plan to carry out a paid-in capital increase for T'way Air as originally planned. It is known that they are contemplating whether to proceed with a shareholder allocation paid-in capital increase or a public offering paid-in capital increase as initially proposed.
According to investment banking (IB) industry sources on the 27th, Daemyung Sonno plans to conduct a paid-in capital increase as previously announced after completing the acquisition of management rights for T'way Air by the end of March. The day before, it disclosed that it would acquire 46.26% of the equity in Tway Holdings held by YeaRimDang and Chairman Na Chun-ho, Vice Chairman Na Sung-hoon, and CEO Hwang Jeong-hyun for 250 billion won, stating that the balance will be paid by March 31. The share transfer is also expected to take place on that day.
Daemyung Sonno demanded a 'shareholder allocation paid-in capital increase' from the largest shareholder YeaRimDang on the 20th of last month as the management dispute began. The intention was to participate in the increase as the second-largest shareholder to help cover the expenses, as significant investments need to be made in aircraft maintenance.
According to the industry, another reason why Daemyung Sonno requested the shareholder allocation paid-in capital increase at the time was to prevent YeaRimDang from conducting a third-party allocation paid-in capital increase. If YeaRimDang rejects the second-largest shareholder's proposal for a paid-in capital increase, the justification for proceeding with a third-party allocation paid-in capital increase diminishes.
Although the management dispute has ended with YeaRimDang selling its equity, Daemyung Sonno maintains its position that a paid-in capital increase is necessary. Due to the aging of aircraft, they need to execute large-scale investments for management normalization, and thus, a paid-in capital increase is unavoidable.
Recently, the Financial Supervisory Service has been scrutinizing the paid-in capital increases of listed companies, but it is expected to understand the special circumstances regarding T'way Air's funding situation, as it has not been able to secure proper funding since the COVID-19 pandemic.
The specific method of the paid-in capital increase has not been finalized. Daemyung Sonno is reportedly seriously considering conducting a public offering paid-in capital increase instead of the previously requested shareholder allocation paid-in capital increase. The shareholder allocation paid-in capital increase targets all shareholders of T'way Air, including Daemyung Sonno, while a public offering allows investment from those other than shareholders. It is said that the new management will make the final decision on which method to choose.
Daemyung Sonno aims to receive approval from the Fair Trade Commission for the corporate merger by the 31st, when the regular shareholders' meeting is scheduled to take place. According to the Fair Trade Act, corporations with total assets or sales exceeding 2 trillion won must file a prior report before completing merger activities such as payment of acquisition funds or merger registration. As of the end of 2023, Daemyung Sonno Group's holding company, Sono International, had consolidated total assets of 3.6 trillion won.
An industry official stated, 'I understand that they need to obtain approval for the 'two-stage merger' between Tway Holdings and Sono International, as well as between T'way Air and Sono International,' and added, 'However, it is not a major issue, so it should be sufficiently possible by the end of March.'
It is reported that the personnel from YeaRimDang, including Vice Chairman Na Sung-hoon, have all decided to step down from the board of directors. Only the nine previously appointed director candidates from Daemyung Sonno are expected to enter the board. Although the board is supposed to have 12 members, it is said that they will not fill the positions entirely at this regular shareholders' meeting.