이 기사는 2021년 06월 17일 07:49 thebell 에 표출된 기사입니다.

South Korea’s budget carrier Eastar Jet will enter final negotiations with a potential buyer to select its final preferred bidder, with the sale price expected to be around a mere 100 billion won ($89 million).

Eastar Jet’s sale advisor Deloitte Anjin will be in talks with a consortium led by Kanglim, a local equipment maker under underwear company Ssang Bang Wool, which submitted its binding offer. The budget carrier plans to select its final preferred bidder as early as June 21, conduct detailed due diligence and enter final negotiations on the price. The process may be delayed depending on the negotiation progress and the court’s decision.

Around 10 strategic investors submitted their letters of intent to acquire the ailing airline, but most of them pulled out of the deal before the final round of bidding. Pan Ocean, which had been considered as one of the strong candidates, also decided to walk away from the deal.

With Pan Ocean walking away from the deal, the deal will be the two-way race between the consortium led by Kanglim and stalking-horse bidder SJ. If the consortium offered the highest price, the stalking-horse bidder must offer a higher price in order to maintain its preferred bidder status. Some market insiders said the bidder may not offer a higher price considering contingent liabilities and risks of litigation with Jeju Air.

There also has been concerns about lack of document for due diligence as Eastar Jet’s back office practically halted its operations along with the suspension of its flights.

“A risk related to contingent liabilities is normally the most important issue for potential buyers in a sale of a company under court receivership,” said an industry source.

Some market insiders said the sale price may not exceed 100 billion won considering risks related to contingent liabilities which have been mentioned as a risk since the preliminary due diligence process. “As the race has lost steam, price competition among prospective buyers also has become less competitive,” the source said.

If the liquidation value is low, the repayment amount corresponding to the acquisition price will also decrease, making the budget carrier difficult to obtain consent from the creditors. Eastar Jet’s liquidation value currently stands at 2.4 billion won. Market insiders have noted that the sale price has to be more than 150 billion won given that its debts amount to 200 billion won.

The seller plans to make its final decision on June 21 after conducting the qualitative assessment on the bidders. (Reporting by Seon-young Kim)