Top officials of the state-run lender Korea Development Bank said Thursday that the proposed merger of South Korea’s two flag carriers, Korean Air Lines and Asiana Airlines -- largely orchestrated by the creditor of the two -- may be scrapped if the court grants an injunction grinding the blockbuster deal to a halt.

If the injunction is granted, the state lender has no choice but to go back to square one and pursue a plan that could cost it 5.4 trillion won ($4.8 billion) by 2027 to keep both Korean Air and Asiana on track -- far more than the creditor’s proposed 800 billion won for the tie-up proposal, KDB Vice President Choi Dae-hyun said in a press conference.

“If the deal is scrapped through a court injunction, KDB will have to go for the alternative plan to normalize the two air carriers separately,” Choi said.

The remarks came a day after an investor group -- composed of private equity fund Korea Corporate Governance Improvement, Bando Construction and the Cho family’s estranged heiress Cho Hyun-ah -- filed for an injunction Wednesday to stop Hanjin KAL from issuing new shares to KDB through a capital increase involving a third-party allotment, which is deemed the backbone of the Korean Air-Asiana merger plan.

The consortium argued that a third-party allotment to increase the company’s capital is unlawful if carried out as part of a proxy war for Hanjin KAL, under whose umbrella Korean Air falls. The KCGI-led consortium has demanded that the right to acquire new shares issued from the capital increase be given equally to all existing shareholders of Hanjin KAL.

KDB, however, countered that its third-party allotment plan had undergone a legal review by undisclosed law firms, and a third-party allotment was the only way to increase the capital promptly, adding that a capital increase from all existing shareholders would take about two extra months.

KDB Chairman Lee Dong-gull said there is no time to spare for the tie-up involving Korean Air’s 1.8 trillion won acquisition of Asiana.

“The proxy war surrounding the leadership of Hanjin KAL is a never-ending story,” Lee said. “Both Korean Air and Asiana will fail if we wait until the war is over.”

KDB announced Monday that it will buy 500 billion won worth of Hanjin KAL shares, or some 10 percent of voting rights, and 300 billion won worth of exchangeable bonds, so that Hanjin KAL can take part in Korean Air’s 2.5 trillion won capital increase, necessary for its Asiana acquisition.

By Son Ji-hyoung (consnow@heraldcorp.com)