Sono Hospitality Group, South Korea’s top resort operator, has vowed a more active role in horning in on the business of T’way Air Co., preluding a proxy battle over the management control of the country’s low-cost carrier (LLC) between the latter’s two largest shareholders.
On Wednesday, Sono International Co., the hospitality giant’s holding company, announced that it will officially take part in the management of T’way Air.
The announcement came two days after Sono International sent a letter to T’way Air, demanding the change of the major budget airline’s entire board of directors and rights offering to guarantee the airline’s stable operation.
The Korean hospitality company, the second-largest shareholder of T’way Air, chastised the airline for ravaging T’way brand after the LLC was slapped with a series of correctional orders and fines for poor operation.
Sono International plans to send a shareholder proposal to T’way Air before the latter’s general shareholders meeting in March to recommend new directors who will come up with a new business strategy to improve the budget carrier’s operation and financial health.
Following the announcement, T’way Air and its holding firm Tway Holdings Inc. shares jumped more than 4% and nearly 25%, respectively, on Wednesday morning.
TO ENHANCE T’WAY AIR’S OPERATION AND SHAREHOLDER VALUE
The Korean resort giant expected its active involvement in T’way Air’s management would foster the LLC’s growth and reinforce shareholder value.
Sono Hospitality Group commands the second-biggest share of 26.77% in T’way Air – Sono International with 16.77% and Daemyung Sonoseason Co. with 10%.
The budget airline’s largest shareholders are Tway Holdings and its top stockholder YeaRimDang Publishing Co. They jointly own a 30.06% stake as of last week.
Due to a mere 3-percentage-point gap between T’way Air’s No. 1 and No. 2 shareholders’ holdings, speculations have loomed that the hospitality company would attempt to take over the budget carrier.
Last year when Sono International acquired T’way Air’s stakes from Seoul-based private equity firm JKL Partners, it said it would not seek to control the airline’s management.
However, the latest move suggests the hospitality group’s pivot from its earlier stance.
AVIATION AS A NEW GROWTH ENGINE
“We will maximize customers’ satisfaction with T’way Air and improve its shareholder value by leveraging Daemyung Sono Group’s extensive infrastructure at home and abroad,” the group’s Chairman Seo Jun-hyuk said on Wednesday.
“Daemyung Sono Group will strive to leap to become a global player by taking advantage of its venture into the aviation industry, the group’s new growth driver.”
Daemyung Sono Group is the former name of Sono Hospitality Group.
Last October, the group also purchased an 11% stake in another Korean LLC Air Premia Inc. from Seoul-based private equity firm JC Partners for 47.2 billion won ($33 million), plus a call option to buy an additional 11% stake in the budget carrier by the end of June 2025.
It also has been aggressive in acquiring hotels and resorts overseas.
In early 2024, Sono Hospitality acquired Hotel Dame Des Arts in Saint Germain-des-Prés, Paris and a 100% stake in Hawaii-based Waikiki Resort Hotel Inc. from Hanjin KAL Corp. in April.
Between 2022 and 2023, Sono International purchased The Normandy Hotel in Washington, D.C. and 33 Hotel, New York City, Seaport.
Late last year, its holding firm Sono International embarked on a process to go public on Korea’s main stock bourse Kospi in the first half of this year.
This is its second initial public offering attempt after folding its earlier IPO plan in 2019 in the aftermath of the COVID-19 pandemic.
By Han-Gyeol Seon
always@hankyung.com
Sookyung Seo edited this article.
