This article was published on July 24, 2025, at 4:39 p.m. on the ChosunBiz MoneyMove site.
Kim Jung-gyu, chairman of Tire Bank, who effectively controls the hybrid (mid-to-long-haul) airline Air Premia, was incarcerated on the 23rd. He was sentenced to three years in prison in an appeals court for tax evasion amounting to hundreds of millions of won.
With Chairman Kim's incarceration, Tire Bank, which needs to acquire a 2nd largest shareholder's equity in Air Premia by the end of September, faces a hurdle. While Kim may not lose his registered director position at Air Premia, or the airline may not lose its operating license, the possibility of delays in funding and completing the acquisition payment has increased, as the central figure is now restricted. Tire Bank may extend the payment deadline until the end of October. If they cannot complete the payment by then, the 2nd largest shareholder can bundle their equity with Tire Bank's equity and publicly sell the management rights.
◇ Must pay an additional 99.4 billion won to acquire Sono and JC's equity… 100 billion won paid-in capital increase and reduction also
According to investment banks (IB) and the legal community on the 24th, the Daejeon High Court's 1st Criminal Division sentenced Chairman Kim to three years in prison and a fine of 14.1 billion won during the appeal hearing for charges related to violations of the Act on the Aggravated Punishment of Specific Crimes. He was incarcerated immediately.
Chairman Kim is accused of evading about 8 billion won using his employees, the branch managers of Tire Bank, as fronts to omit cash sales or underreport transaction details. He was indicted in October 2017 and was previously sentenced to four years in prison and a 10 billion won fine, but he had avoided incarceration.
AP Holdings, the largest shareholder of Air Premia, whose three children share equity, is currently in the process of securing funds to acquire the equity held by Daemyung Sono and JC Partners, which is the 2nd largest shareholder of Air Premia. They must fully settle the acquisition payment of 119.4 billion won for a 22% equity stake by the end of September. They have already paid 20 billion won as a down payment and now need to pay an additional 99.4 billion won. Once payment is complete, AP Holdings will hold more than 70% of Air Premia.
AP Holdings is reported to be planning to issue convertible bonds (CB) to sell to Tire Bank, while utilizing acquisition financing for the remainder. It is said that Tire Bank has already secured the funds it will provide to AP Holdings in the form of CB.
Following Chairman Kim's incarceration, observers in the market believe that it is difficult for AP Holdings to ensure the acquisition of the 2nd largest shareholder's equity. A source from the IB industry noted, "While Tire Bank's financial strength is stable, making fund acquisition through CB shouldn't be an issue, it is questionable whether the recruitment of external financing will be conducted appropriately due to its public image."
The deadline for AP Holdings to pay the acquisition funds is by the end of September. However, it is reported that they can extend the deadline for a month while paying interest. If the final payment is not completed by the end of October, Daemyung Sono and JC Partners can both take half of the down payment of 20 billion won and publicly sell the 46% equity held by AP Holdings to a third party (drag-along). The drag-along right will be held by JC Partners.
Even after acquiring the 2nd largest shareholder's equity in Air Premia, AP Holdings will need to inject additional funds. They plan to conduct a paid-in capital increase and reduction of up to 100 billion won within this year to resolve capital impairment. If the paid-in capital increase is not made using Tire Bank's own funds but raised from external investments, Chairman Kim's legal risks may pose a hindrance.
◇ Incarceration is not a legal disqualification for managing Air Premia
This incarceration has not created a legal disqualification preventing Chairman Kim from continuing to manage Air Premia.
Article 9 of the Aviation Business Act states that a person who is sentenced to actual prison time of more than one year for violations of the Aviation Safety Act, the Airport Facilities Act, or the Aviation Security Act and has not elapsed three years since the serving of the sentence or its waiver cannot hold an airline transport business license. Chairman Kim, who is facing tax evasion charges, does not fall under this provision.
Some corporations have articles that allow the removal or suspension of a CEO when they are sentenced to actual prison time; however, it is reported that Air Premia does not have such provisions.
However, industry insiders believe that Chairman Kim is likely to step down from his internal director positions at Air Premia and AP Holdings. He currently holds both internal director positions at Air Premia and is the CEO of AP Holdings.
An industry source noted, "If the CEO's incarceration causes a gap in aviation safety management or operations, the Ministry of Land, Infrastructure and Transport may issue correction orders," adding, "In order to avoid such risks, it seems likely that Chairman Kim will resign from his directorship."