Delta Air Lines' recent purchase of a stake in Hanjin KAL, parent company of Korean Air Lines, was just an investment, not a ploy to help protect the airline's management rights, according to a local activist fund on Tuesday.
In its reply to a letter sent by the Korea Corporate Governance Improvement fund, Delta Air Lines said its purchase of the 4.3 percent stake in Hanjin KAL was part of its investment plan, KCGI said in a statement.
(Delta Air Lines)
On June 20 (US time), Delta announced the stake investment in Hanjin KAL and said it would eventually increase its share in the company to 10 percent.
In a letter sent to Delta on June 28, KCGI called on the US airline to clarify the purpose of its investment in Hanjin KAL, which owns a 30-percent stake in Korean Air.
Delta's unexpected investment in Hanjin KAL has cleared uncertainties surrounding the Korean company's battle to defend its management rights against any attacks by activist hedge funds, such as KCGI.
Delta and Korean Air formed a joint venture last year to collaborate on the industry's most robust trans-Pacific routes, providing customers access to more than 290 US destinations and over 80 in Asia.
With Delta's investment, KCGI has been widely expected to face an uphill battle in bringing changes to Hanjin Group, the country's 14th-biggest logistics-centered conglomerate.
KCGI has been demanding a Seoul court designate an auditor to review Hanjin KAL's appointment process for a new chairman.
Hanjin KAL's board named late Chairman Cho Yang-ho's only son, Won-tae, as the new chairman in April following his father's death.
The Cho family and other relatives together hold a 28.93 percent stake, including 17.84 percent held by the late chairman, in Hanjin KAL. The National Pension Service owns a 7.34 percent stake in the firm. (Yonhap)