Private equity firm VIG Partners has acquired a 100% stake in South Korea’s low-cost carrier Eastar Jet with plans to infuse about $90 million funds into the airline. Going ahead VIG Partners is also planning to raise an additional $86 million through a rights offering towards January 2023 end to settle part airline’s debts and add new aircraft, including Boeing 737-8s.
After the transaction, the airline will seek to accelerate the process of reissuing an Air Operator Certificate (AOC) from the Ministry. The carrier applied for reissuance of its AOC last year to resume flight service but still hasn’t received the Korean government's approval.
Going ahead, VIG Partners will boost the co-operation between the airline and the travel booking platform My Real Trip. In June 2022, the VIG Partner’s private credit unit VIG Alternative Credit invested 52 billion won in My Real Trip's bond with warrants (BWs), which gives the investor the right to buy a specified number of shares at a specified price for a certain period.
VIG Partners has signed a deal to purchase the stake for $27.5 million via its fourth fund from real estate developer Sung Jung and its golf course operation affiliate Baekje Country Club. The two previous shareholders bought the budget carrier for about 120 billion won in 2021.
Eastar Jet started operating between Korea's Gimpo airport and Jeju Island in January 2009 and launched international flight services later that year. However, in 2020, the airline suspended all flight operations due to deteriorating financial conditions.
Jeju Air Co had signed an agreement to take over Eastar Jet in 2020 but scrapped the plan the same year, citing financial uncertainties.