Korea’s Eastar Jet stalks new investor, launches auction

Eastar Jet (ESR, Seoul Gimpo) announced on Monday, May 17, that it had launched an open auction to find an investor by deploying a “stalking-horse” bid, having signed a deal with an unnamed preliminary preferred investor on May 14. During the auction, for which Eastar Jet obtained approval from Seoul Bankruptcy Court, which is overseeing its restructuring process, the preferred bidder acts as the stalking horse for the budget carrier – under whose price other entities cannot bid. Eastar Jet has set May 31 as the deadline by which all interested companies must send their letters of intent, after which it will conduct a “preliminary inspection” of the prospective bidders by June 7 and ask for final bid documents from them by June 14. The airline will then select the final investor. The carrier’s chief executive, Kim You-sang, told Yonhap News Agency that several companies had shown an interest in acquiring it since the bankruptcy court approved the corporate rehabilitation process in February. He said that the preliminary preferred investor that had signed the conditional investment contract was not a “strategic investor” or a large consortium but “a mid-sized company.” Eastar Jet is currently required to submit its debt-repayment and other restructuring plans to the court by May 20 with the aim of then regaining its Air Operator’s Certificate (AOC) and resuming flights on domestic routes in June. However, Kim said it would ask the court to extend the May 20 deadline, as the delayed auction process had only just begun.