Race to acquire Eastar Jet heats up as more companies enter bidding process

More companies including poultry producer Harim and underwear company Ssang Bang Wool have entered the race to acquire financially troubled budget airline Easter Jet.

Around ten companies and private equity funds have submitted a Letter of Intent to acquire the low cost carrier, according to reports citing sources close to the industry.

The list includes Kanglim, a crane manufacturer and a subsidiary of Ssang Bang Wool Group, as well as Harim Group‘s shipping company Pan Ocean.

The deal is being led by Seoul Bankruptcy Court and its sales advisor Deloitte Anjin LLC.

Harim is the largest livestock company in the country. It posted some 7 trillion won ($6.3 billion) in revenue in 2019, though its market capitalization is estimated at around 700 billion won.

During an interview with local media outlet The Financial News on Tuesday, chairman of Harim Kim Hong-kuk said the company wants to “branch out into the air cargo industry” by acquiring the budget airline through Pan Ocean.

A representative at Harim, however, declined to comment on the matter.

Eastar Jet CEO Kim You-sang has previously said the investor selection process will take place in the form of a stalking horse bid – a process in which an initial bidder sets the bar and other potential buyers have to outbid in order to become the new owner of the airline.

The bidders are expected to come up with their final price in two weeks after which Easter Jet will choose an investor based on factors such as the scale of the bidding price and the types of capital investment.

If things go to plan, Easter Jet is set to be acquired by a new investor sometime this month.

The latest turn of events comes after debt-ridden Easter Jet has faced difficulties finding a new investor for months since another budget airline Jeju Air opted out of its plans to acquire the airline last July, leaving the fate of the company uncertain.

The aviation industry was hit hard by the coronavirus pandemic but budget airlines in particular have suffered a heavy loss while full service airlines such as Korean Air and Asiana Airlines pivoted to cargo to keep their businesses afloat.

By Yim Hyun-su (hyunsu@heraldcorp.com)