prospectus not for distribution to any us person or to any person or address in the us

345 Pages·2014·3.04 MB·English

IMPORTANT NOTICE — PROSPECTUS
NOT FOR DISTRIBUTION TO ANY
U.S. PERSON OR TO ANY PERSON OR ADDRESS IN THE U.S.
IMPORTANT: You must read the following before continuing. The following applies to the prospectus
following this page (the “Prospectus”), and you are therefore advised to read this carefully before reading,
accessing or making any other use of the Prospectus. In accessing the Prospectus, you agree to be bound
by the following terms and conditions, including any modifications to them any time you receive any
information from us as a result of such access.
NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR
SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.
THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF
THE U.S. OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN
THE U.S. OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS.
IN THE UNITED KINGDOM THE PROSPECTUS IS DIRECTED ONLY AT PERSONS WHO MEET THE
FOLLOWING CRITERIA: 1. (A) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO
INVESTMENTS OR (B) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) (“HIGH NET WORTH
COMPANIES, UNINCORPORATED ASSOCIATIONS ETC”) OF THE FINANCIAL SERVICES AND
MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 AND 2. (A) MARKET COUNTERPARTIES
OR (B) INTERMEDIATE CUSTOMERS (WITHIN THE MEANING OF THE RULES OF THE FINANCIAL
SERVICES AUTHORITY (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT
PERSONS”). THE PROSPECTUS MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE
NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THE
PROSPECTUS RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN
ONLY WITH RELEVANT PERSONS.
THE PROSPECTUS MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY
NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND IN PARTICULAR, MAY NOT BE
FORWARDED TO ANY U.S. PERSON OR TO ANY U.S. ADDRESS. ANY FORWARDING, DISTRIBUTION
OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO
COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE
APPLICABLE LAWS OF OTHER JURISDICTIONS.
Confirmation of your Representation: In order to be eligible to view the Prospectus or make an investment
decision with respect to the securities, investors must not be a U.S. person (within the meaning of
Regulation S under the Securities Act). By accepting this e-mail and accessing the Prospectus, you shall
be deemed to have represented to us that you are not a U.S. person; the electronic mail address that you
have given to us and to which this e-mail has been delivered is not located in the U.S., its territories and
possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands), any State of the United States or the District of Columbia; and that you consent
to delivery of the Prospectus by electronic transmission.
You are reminded that the Prospectus has been delivered to you on the basis that you are a person into
whose possession the Prospectus may be lawfully delivered in accordance with the laws of the jurisdiction
in which you are located and you may not, nor are you authorised to, deliver the Prospectus to any other
person.
The materials relating to the offering do not constitute, and may not be used in connection with, an offer
or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires
that the offering be made by a licensed broker or dealer and the underwriters or any affiliate of the
underwriters is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by
the underwriters or such affiliate on behalf of the Issuer in such jurisdiction.
The Prospectus has been sent to you in an electronic form. You are reminded that documents transmitted
via this medium may be altered or changed during the process of electronic transmission and consequently
none of Daiwa Securities Capital Markets Korea Co., Ltd., Standard Chartered Bank, The Korea
Development Bank nor any person who controls either of them nor any director, officer, employee nor agent
of it or affiliate of it accepts any liability or responsibility whatsoever in respect of any difference between
the Prospectus as distributed to you herewith in electronic format and the hard copy version.
You are responsible for protecting against viruses and other destructive items. Your use of this e-mail
is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and
other items of a destructive nature.
KAL ABS 15 CAYMAN LIMITED
(incorporated with limited liability under the laws of the Cayman Islands)
U.S.$350,000,000 Secured Floating Rate Notes due 2017
Issue Price: 100%
The U.S.$350,000,000 Secured Floating Rate Notes due 2017 (the “Notes”) of KAL ABS 15 Cayman Limited (the
“Note Issuer”) will be constituted by a note trust deed (the “Note Trust Deed”) dated on or about 25 November 2014
among, inter alios, the Note Issuer and Citicorp International Limited, as trustee for the holders of the Notes (the “Note
Trustee”). The Notes are expected to be issued on or about 25 November 2014 (the “Closing Date”). The Notes are
limited recourse obligations of the Note Issuer and will be secured by, inter alia, the U.S.$350,000,000 Variable Rate
Bond due 2017 (the “Bond”) issued by KAL 15 Asset Securitization Specialty Company (the “Bond Issuer”), a Korean
limited liability company (yuhanhoesa) incorporated under the Act Concerning Asset Backed Securitization of Korea
and the Korean Commercial Code, to the Note Issuer on the Closing Date.
It is expected that the Notes will, when issued, be assigned a “Aa3” rating by Moody’s Investors Service Hong Kong
Limited (the “Rating Agency”). A rating is not a recommendation to buy, sell or hold securities and may be subject
to revision, qualification, suspension or withdrawal at any time by the assigning rating organisation.
Investing in the Notes involves risks. See “Risk Factors” on page 44.
This Prospectus has been approved by the Central Bank of Ireland (the “Central Bank”), as competent authority under
Directive 2003/71/EC. Such approval relates only to the Notes which are to be admitted to trading on a regulated
market for the purposes of Directive 2004/39/EC or which are to be offered to the public in any Member State of the
European Economic Area. Application has been made to the Irish Stock Exchange for the Notes to be admitted to the
Official List and trading on its regulated market. No assurance can be given that such listing will be obtained on or
before the Closing Date, or at all. This document constitutes a prospectus for the purposes of Directive 2003/71/EC.
The transactions relating to the issuance of the Notes are arranged by Daiwa Securities Capital Markets Korea Co.,
Ltd., Standard Chartered Bank and The Korea Development Bank as the joint lead arrangers and the joint lead
managers (the “Joint Lead Arrangers” and the “Joint Lead Managers”).
The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended
(the “U.S. Securities Act”) or under the securities laws of any state of the United States and, unless so
registered, may not be offered or sold within the United States or to, or for the account or benefit of, U.S.
persons (as defined in Regulation S under the U.S. Securities Act (“Regulation S”)) except pursuant to an
exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and
applicable state securities laws. Accordingly, the Notes are being offered and sold only outside the United
States to non-U.S. persons in accordance with Regulation S under the U.S. Securities Act.
Interest on the Notes is payable by reference to successive interest periods (each, an “Interest Period”). Interest is
payable on the Notes monthly in arrear on the 27th day of each calendar month or, if such day is not a Business Day,
the next succeeding Business Day unless that day falls in the next calendar month, in which case the first preceding
day which is a Business Day (each, a “Note Payment Date”), commencing in January 2015. Interest will accrue on
the Principal Amount Outstanding (as defined herein) of the Notes as of the first day of each relevant Interest Period
on the basis of the actual number of days elapsed in such Interest Period and a 360 day year at a rate per annum equal
to the sum of USD-LIBOR-BBA for one month U.S. dollar deposits (as calculated by the Calculation Agent under the
Swap Agreement for the related Interest Period) plus a margin of 0.65 per cent.
Unless previously redeemed in full, the Note Issuer will redeem the Notes in full on the Note Payment Date falling in
November 2017 (the “Note Maturity Date”) at their Principal Amount Outstanding together with accrued interest. The
Notes will be issued in registered form in the minimum denomination of U.S.$200,000 and integral multiples of
U.S.$1,000 in excess thereof. The Notes will be exchangeable, and transfers thereof will be registrable, at the offices
of Citibank, N.A., London Branch as note registrar (the “Note Registrar”). It is expected that the Notes will be
delivered through the facilities of Euroclear Bank S.A./N.V. as operator of the Euroclear System (“Euroclear”) and
Clearstream Banking, société anonyme (“Clearstream, Luxembourg”) on or about 25 November 2014.
Joint Lead Arrangers and Joint Lead Managers
Daiwa Securities Capital Standard Chartered Bank The Korea Development Bank
Markets Korea Co., Ltd
The date of this Prospectus is 20 November 2014
IMPORTANT NOTICE
Prospective investors should rely only on the information contained in this Prospectus or to
which reference is made herein. The Note Issuer has not authorised anyone to provide
prospective investors with information that is different. This document may only be used where
it is legal to sell the Notes. The information in this Prospectus may only be accurate on the date
of this Prospectus.
On the Closing Date, the Note Issuer will use the proceeds of the issue of the Notes to
purchase the Bond from the Bond Issuer. The Bond Issuer will use the proceeds of the issue
of the Bond to purchase from Korean Air Lines Co., Ltd. (in its various capacities, the
“Depositor”, the “Servicer”, “Korean Air”, “KAL” or the “Company”), a depositor note (the
“Depositor Note”) issued by KAL ABS 15 US Trust, a Delaware trust (the “Trust”), pursuant
to an Indenture dated 11 November 2014 (the “Indenture”) between the Trust and Citibank,
N.A., as Indenture Trustee (“Indenture Trustee”).
One Business Day prior to the Closing Date, KAL will sell to the Trust current and future
receivables evidencing amounts owed to it in respect of sales of airline tickets through the Visa
and MasterCard payment systems and, upon the sale of the Depositor Note to the Bond Issuer,
KAL will contribute the Reserve Funding Amount (as defined herein) to the Trust for deposit
with the Indenture Trustee. The Bond Issuer, as holder of the Depositor Note, will be entitled
to receive certain payments of interest and principal from the Receivables owned by the Trust,
as more fully described in “Transaction Overview—The Trust”. The Bond Issuer will make
payments of interest and principal on the Bond on each Bond Payment Date (as defined
herein) or on the relevant Mandatory Redemption Payment Date (as defined herein) following
and to the extent of receipt of distributions of interest and principal on the Depositor Note on
each Trust Distribution Date (as defined herein) or on the relevant Mandatory Redemption
Payment Date. The Note Issuer will make payments of interest through the Swap Agreement
(as defined herein) and principal on the Notes on each Note Payment Date (as defined below)
following receipt of payments of interest and principal on the Bond from the Bond Issuer.
Unless previously redeemed or purchased and cancelled, the Note Issuer will redeem the
Notes in full on the Note Payment Date falling in November 2017 (the “Note Maturity Date”)
at their Principal Amount Outstanding together with accrued interest to the Note Maturity Date.
However, upon receipt of a redemption notice in respect of the Bond (the “Bond Redemption
Notice”) from the Bond Issuer, the Note Issuer will redeem the Notes, in whole or in part to the
extent of funds available therefor in accordance with the priority of payments set forth in the
Note Trust Deed on the next succeeding Note Payment Date or on the relevant Mandatory
Redemption Payment Date, at their Principal Amount Outstanding on such date together with
accrued interest to such date. See “Terms and Conditions of the Notes”.
The Credit Facility Provider (as defined herein) will grant a credit facility (the “Credit Facility”)
to the Note Issuer enhancing the likelihood of timely payments of interest and principal on the
Notes.
It is expected that the Notes will, when issued, be assigned a “Aa3” rating by the Rating
Agency. The rating will relate to the timely payments of interest and principal on the Notes. A
security rating is not a recommendation to buy, sell or hold securities, does not address
the likelihood or timing of prepayment and may be subject to revision, qualification,
suspension or withdrawal at any time by the assigning rating organisation. A revision,
qualification, suspension or withdrawal of any rating assigned to the Notes may
adversely affect the market price of the Notes.
Any Definitive Note Certificate (as defined herein) issued in respect of the Notes will bear
restrictive legends and will be subject to the restrictions on transfer as described herein.
2
The Notes are expected to settle in book-entry form through the facilities of Clearstream,
Luxembourg and Euroclear on or about the Closing Date against payment therefor in
immediately available funds.
The Note Issuer accepts responsibility for all the information included in this Prospectus. To
the best of the knowledge and belief of the Note Issuer, the information contained in this
Prospectus is in accordance with the facts and does not omit anything likely to affect the import
of such information.
The information relating to Visa, MasterCard and USB (each as defined herein) (the “Account
Debtor Information”) has been accurately reproduced from information published by each of
them and which is publicly available on their respective websites and in the case of USB,
certain information has been accurately reproduced from documents provided by US Bancorp.
So far as the Note Issuer is aware and is able to ascertain from information published by each
of Visa, MasterCard and USB, no facts have been omitted which would render the reproduced
information inaccurate or misleading.
No person is authorised in connection with the issue and sale of the Notes to give any
information or to make any representation not contained in this Prospectus and, if given or
made, any such information or representation not contained herein must not be relied upon as
having been authorised by or on behalf of the Note Issuer, the Bond Issuer, the Depositor, the
Servicer, the Joint Lead Arrangers, the Joint Lead Managers, the U.S. Trustee, the Indenture
Trustee the Trust, the Note Trustee, the Security Agent (as defined herein), the Agents (as
defined herein), the Swap Provider (as defined herein) or the Credit Facility Provider. Neither
the delivery of this Prospectus at any time, nor any sale made in connection herewith, will, in
any circumstance, create an implication that there has been no change in the affairs of the
Note Issuer since the date hereof or that the information contained herein is correct as of any
time subsequent to such date.
None of the Joint Lead Arrangers, the Joint Lead Managers, the Initial Subscribers, the U.S.
Trustee, the Indenture Trustee, the Trust, the Bond Issuer, the Note Trustee, the Security
Agent, the Agents, the Transaction Administrator, the Credit Facility Provider (other than in
respect of the Credit Facility Provider Information) or the Swap Provider has separately
verified the information contained in this Prospectus. Accordingly, no representation, warranty
or undertaking, express or implied, is made and no responsibility or liability is accepted by the
Joint Lead Arrangers, the Joint Lead Managers, the Initial Subscribers, the U.S. Trustee, the
Indenture Trustee, the Trust, the Bond Issuer, the Transaction Administrator, the Note Trustee,
the Security Agent, the Agents, the Transaction Administrator, the Credit Facility Provider or
the Swap Provider as to the accuracy or completeness of the information contained in this
Prospectus or any other information supplied in connection with the Notes. Each person
receiving this Prospectus acknowledges that such person has not relied on the Joint Lead
Arrangers, the Joint Lead Managers, the Initial Subscribers, the U.S. Trustee, the Indenture
Trustee, the Trust, the Bond Issuer, the Note Trustee, the Security Agent, the Agents, the
Transaction Administrator, the Credit Facility Provider (other than in respect of the Credit
Facility Provider Information) or the Swap Provider nor on any person affiliated with any of
them in connection with its investigation of the accuracy of such information or its investment
decision.
This Prospectus does not constitute an offer and may not be used for the purpose of an offer
to or solicitation by anyone in any jurisdiction or in any circumstances in which such offer or
solicitation is not authorised or in which it is unlawful to make such offer or solicitation. No
action has been or will be taken to permit a public offering of the Notes in any jurisdiction
where action would be required for that purpose. The Notes may not be offered or sold, directly
or indirectly, and this Prospectus may not be distributed, in any jurisdiction except in
accordance with the legal requirements applicable in such jurisdiction.
3
Accordingly, the Notes may not be offered or sold, directly or indirectly, and neither this
Prospectus nor any part of it nor any other prospectus, form of application, advertisement,
other offering material or other information may be issued, distributed or published in any
country or jurisdiction except under circumstances that will result in compliance with all
applicable laws, orders, rules and regulations.
Each person contemplating making an investment in the Notes must make its own
investigation and analysis of the Note Issuer and the terms of the offering including the merits
and risks involved, and its own determination of the suitability of any such investment, with
particular reference to its own investment objectives and experience and any other factors
which may be relevant to it in connection with such investment. Any investor in the Notes
should be able to bear the economic risk of an investment in the Notes for an indefinite period
of time.
None of the Note Issuer, the Bond Issuer, the Joint Lead Arrangers, the Joint Lead Managers,
the Initial Subscribers, the Depositor, the U.S. Trustee, the Indenture Trustee, the Trust, the
Note Trustee, the Security Agent, the Agents, the Transaction Administrator, the Swap Provider
or the Credit Facility Provider makes any representation to any investor in the Notes regarding
the legality of its investment under any applicable laws.
The contents of this Prospectus should not be construed as providing legal, business,
accounting or tax advice. Each prospective investor should consult its own legal, business,
accounting and tax advisers prior to making a decision to invest in the Notes.
The language of the Prospectus is English. Certain legislative references and technical terms
have been cited in their original language in order that the correct technical meaning may be
ascribed to them under applicable law.
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
Percentages in the tables in this Prospectus may not add up to 100 per cent. because of
rounding. Any discrepancies in any table between totals and the sums of the amounts listed
are due to rounding.
References in this Prospectus to “KRW”, “Won”, “Korean Won” or “—W” are to the lawful
currency for the time being of the Republic of Korea (“Korea”). References in this Prospectus
to “U.S.$”, “Dollars”, “U.S. dollars”, “$” or “USD” are to the lawful currency for the time being
of the United States of America (the “U.S.” or the “United States”). References in this
Prospectus to “Euro” or “=C” are to the lawful currency introduced at the commencement of the
third stage of the European Economic and Monetary Union on 1 January 1999 pursuant to the
Treaty establishing the European Community as amended by the Treaty on European Union.
All references to the “Government” herein are references to the Government of Korea.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in the sections entitled “Transaction Overview”, “The Depositor and
Servicer”, “The Receivables” and elsewhere in this Prospectus constitute “forward-looking
statements”. Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the success of collections, the actual cash flow generated by
the Receivables, the expected amortisation of the Notes and the expected origination of
sufficient Receivables by the Depositor to differ materially from the information set forth herein
and to be materially different from any future results, performance or financial condition
expressed or implied by such forward-looking statements. See “Risk Factors”.
4
While all reasonable care has been taken to ensure that the facts stated herein are accurate
and that the forward-looking statements, opinions and expectations contained herein are
based on fair and reasonable assumptions, the success of collections, the actual cash flow
generated by the Receivables, the expected amortisation of the Notes and the expected
origination of sufficient Receivables by the Depositor may differ materially from the projections
set forth in any forward-looking statements herein. Investors should not place undue reliance
on forward-looking statements and are advised to make their own independent analysis and
determination with respect to any forecasted periods contained in this Prospectus. No party to
the offering undertakes any obligation to revise these forward-looking statements to reflect
subsequent events or circumstances.
AVAILABLE INFORMATION
The Note Issuer and the Servicer will furnish to the Note Trustee and holders of the beneficial
interests in the Global Note as identified by Euroclear and Clearstream, Luxembourg certain
information on a periodic basis. For so long as the Notes are listed on the Irish Stock
Exchange, such information will be available during normal business hours on any London
Business Day at the registered office for the time being of Citibank, N.A., London Branch as
principal paying agent (the “Principal Paying Agent”).
ARTICLE 122A OF THE CAPITAL REQUIREMENTS DIRECTIVE
Korean Air will retain a material net economic interest of at least 5 per cent. in this transaction
in accordance with Article 122(a) (“Article 122a”) of Directive 2006/48/EC (as amended by
Directive 2009/111/EC), referred to as the Capital Requirements Directive (“CRD 2”). As at the
Closing Date, such interest will comprise an interest in the Depositor Certificate (as defined
herein) which is not less than 5 per cent. of the beneficial interests in the Conveyed Assets.
Any change to the manner in which this interest is held will be notified to investors. See “Risk
Factors—Other Risks—Regulatory initiatives may result in increased capital requirements
and/or decreased liquidity in respect of the Notes” and “General Information” for further
information.
5
CONTENTS
Transaction Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Rating of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Summary of Provisions relating to Notes in Global Form . . . . . . . . . . . . . . . . . . . . . . . 61
Terms and Conditions of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
The Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
The Depositor and Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Visa, Mastercard and USB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
The USB Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
The Note Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
The Bond Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
The Trust and the U.S. Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
The Credit Facility Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
The Swap Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Korean Foreign Exchange Controls and Securities Regulations . . . . . . . . . . . . . . . . . . 119
Certain Legal Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Subscription and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Index to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
6
TRANSACTION OVERVIEW
The information set out below is an overview of the principal features of the transaction. As this
is an overview, it is qualified in its entirety by reference to the detailed information appearing
elsewhere in this Prospectus and the Transaction Documents (as defined herein).
Korean Air
(Depositor)
Conveyed Depositor
Assets Certificate

Reserve
Trust
Account
Depositor
Note
Korean Air
(Seller)
Depositor U.S.$
Note
Bond Issuer
and Depositor
Noteholder
(Korea)
Bond U.S.$
Swap
Agreement
Note Issuer
(Cayman Islands)
Credit
Facility
Notes U.S.$
Investors
Capitalised terms used in this summary section are defined in the more detailed sections
below and in the “Glossary”.
On the Closing Date, the Note Issuer will apply the gross proceeds of the issue of
U.S.$350,000,000 Secured Floating Rate Notes due 2017 to purchase a U.S.$350,000,000
Variable Rate Bond due 2017 from the Bond Issuer. The Bond Issuer will apply the proceeds
of the issue of the Bond to purchase the Depositor Note from the Seller.
The Note Issuer will enter into a Credit Facility Deed with The Korea Development Bank in its
capacity as the Credit Facility Provider on or about 25 November 2014 in order to support its
payment obligations under the Notes. The Note Issuer has entered into a Swap Agreement with
The Korea Development Bank in its capacity as Swap Provider, on 20 November 2014 in order
to hedge its interest rate exposure under the Notes.
7
TRANSACTION PARTIES
The Note Issuer
KAL ABS 15 Cayman Limited (the “Note Issuer”), an exempted company incorporated with
limited liability in the Cayman Islands and managed by the Note Issuer Administrator (as
defined below).
The Note Issuer’s sole business will be (i) the purchase of the Bond (as defined herein) from
the Bond Issuer (as defined below), (ii) the transfer and assignment to the Note Trustee (as
defined below) of a security interest in substantially all of the Note Issuer’s property and assets
(the “Note Secured Property”), (iii) the issuance of the Notes (as defined herein) and (iv) the
entry into and performance of its obligations under, referred to in, or contemplated by, the
Transaction Documents.
The Bond Issuer
KAL 15 Asset Securitization Specialty Company, (the “Bond Issuer”), a limited liability special
securitisation company (yuhanhoesa) incorporated in Korea.
The sole business of the Bond Issuer will be (i) the purchase from KAL of the Depositor Note
(as defined herein) issued by the Trust (as defined herein) created under the Indenture (as
defined herein) pursuant to a sale and purchase agreement dated on or about 11 November
2014 among, inter alios, KAL and the Bond Issuer in its capacity as Depositor Noteholder (the
“Depositor Noteholder”) (the “Depositor Note Sale and Purchase Agreement”), (ii) the
creation of the Bond Issuer Security (as defined below), (iii) the issuance of the Bond to the
Note Issuer and (iv) any other activities permitted pursuant to the Act Concerning Asset
Backed Securitisation of Korea (Law No. 5555, 16 September 1998) (the “ABS Act”), including
entering into agreements necessary for the performance of its obligations under the
transaction specified in the securitisation plan registered with the Financial Services
Commission of Korea (the “FSC”).
The Trust
The Trust has been established as a Delaware statutory trust pursuant to a trust agreement
dated 11 November 2014 (the “Trust Agreement”) among the Depositor, the U.S. Trustee and
the Trust Administrator. In accordance with a receivables sale and contribution agreement
dated 11 November 2014 (the “Receivables Sale and Contribution Agreement”) between the
Depositor and the Trust, KAL will, one Business Day prior to the Closing Date, sell to the Trust
the Receivables (as defined herein) and on or before the Closing Date, KAL shall contribute
or shall procure that there is contributed to the Trust, the Reserve Funding Amount. Pursuant
to an Indenture the Trust will issue the Depositor Note to KAL. The Depositor Certificate will
be issued to the Depositor in its capacity as owner of the beneficial interest in the Trust
pursuant to the Trust Agreement.
The Depositor
Korean Air Lines Co., Ltd. (“KAL”, “Korean Air”, the “Servicer” or the “Depositor”):
(a) (i) will sell or contribute one Business day prior to 25 November 2014 (the “Closing
Date”) all of its rights, title, interest and benefit (present and future, actual and
contingent) in, to and under certain receivables (the “Receivables”), owed to the
Depositor from time to time under the Merchant Processing Contract (as defined
herein) from the Merchant Processor (currently U.S. Bank National Association
(“USB”)) as the Depositor’s merchant processor for MasterCard International Inc.
(“MasterCard”) and Visa Inc. and its affiliates, Visa U.S.A. Incorporated and/or Visa
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International Services Association (“Visa”). The Receivables will be generated in the
future as a result of the purchase of airline tickets and related services, paid in U.S.
dollars, by customers of the Depositor paying with cards bearing the service mark of
either Visa or MasterCard; and
(ii) will contribute or will cause to be contributed on or before the Closing Date
U.S.$21,706,171.22 (the “Reserve Funding Amount”) to fund the Reserve Account
(as defined herein);
(b) will agree to deposit additional monies from time to time to the Trust pursuant to the
Receivables Sale and Contribution Agreement; and
(c) on or before the Closing Date take receipt of a U.S. dollar denominated certificate (the
“Depositor Certificate”) representing the interest of the Depositor in its capacity as
owner of the beneficial interest in the Trust (the “Depositor Beneficiary”).
The Servicer
The Depositor will act as the servicer (the “Servicer”) for the Trust in respect of the
Receivables (the “Serviced Assets”). The Servicer may, in the event of a Servicer Termination
Event (as defined herein), be removed as Servicer. See “—Servicing”.
The Credit Facility Provider
The Korea Development Bank will act as credit facility provider (the “Credit Facility
Provider”) and will enter into a credit facility deed with, inter alios, the Note Issuer and the
Note Trustee (as defined below) (the “Credit Facility Deed”) to provide a credit facility (the
“Credit Facility”) in respect of payments of principal and interest on the Notes and the Note
Issuer’s obligations which rank in priority to, or pari passu with, principal and interest in
respect of the Notes. See “—The Notes—Credit Facility” below.
The U.S. Trustee
Citicorp Trust Delaware, National Association will act as owner trustee of the Trust (the “U.S.
Trustee”) pursuant to the provisions of the Trust Agreement.
The Indenture Trustee
Pursuant to the Indenture, Citibank, N.A. will act as trustee of the Depositor Note and hold the
Receivables and other Conveyed Assets pledged by the Trust in trust for the benefit of the
Depositor Noteholder (the “Indenture Trustee”).
The Trust Administrator
Finacity Corporation will act as administrator of the Trust (the “Trust Administrator”) pursuant
to the Trust Agreement.
The Note Trustee
Citicorp International Limited will act as trustee for the holders of the Notes (the “Note
Trustee”). The Note Trustee will hold the Note Security on behalf of the Noteholders and the
other Note Secured Parties and will provide certain administrative services to the Note Issuer
in relation to the Note Issuer Obligations (each as defined herein).
The Transaction Administrator, the Bond Issuer Servicer and the Bond Issuer
Administrator
The Bond Issuer will appoint Citibank Korea Inc. (the “Transaction Administrator”) to provide
certain administrative services in relation to the payment obligations of the Bond Issuer
pursuant to the terms of a transaction administration agreement dated 11 November 2014
between, inter alios, the Bond Issuer and the Transaction Administrator (the “Transaction
Administration Agreement”).
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