Korean Air injects $950mn into Los Angeles hotel affiliate

Korean Air (KE, Seoul Incheon) has revealed details of a September 16 board meeting in which it agreed to inject KRW1.1 trillion won (USD950 million) into logistics affiliate Hanjin International Corporation to help pay off its debts. Hanjin International’s raison d’être is to own and operate the upscale 73-storey Wilshire Grand Centre in Los Angeles, which comprises the 890-room InterContinental Los Angeles Downtown, office space, restaurant, and retail areas, according to the website of Korean Air parent Hanjin KAL. The board of directors resolved to pay USD900 million in debts that the skyscraper’s owner has accumulated, plus USD50 million to cover operating expenses for the hotel, the Korea Economic Daily reported. The sum was provided as a loan at 4.6% annual interest. The late Cho Yang-ho, who was chairman and chief executive of Korean Air and chairman of Hanjin KAL until his death in April 2019, said during the opening ceremony in 2017 that the skyscraper represented “the culmination of my dreams.” But despite early expectations the hotel became a financial burden for its parent company. As soon as the ailing hotel business – whose losses have deepened further with the coronavirus crisis – improves, or even before then, the flag carrier aims to initiate the sale of the building. Korean Air plans to pay for the sum it is lending by itself borrowing USD300 million from the state-owned Export-Import Bank of Korea at the end of this month and digging into its own coffers for the remaining USD650 million.