South Korea’s Hanjin Shipping Co yesterday decided to seek a court-led restructuring after creditor banks refused further financial help in a major blow to the nation’s top shipper.
Board members at Hanjin Shipping — the world’s seventh-largest shipping line by capacity — yesterday morning voted to file for court receivership that afternoon, a company spokesman said.
The court is to decide whether to put Hanjin under a recovery program, in which it supervises the firm’s management and reschedules debt payments, or to declare it bankrupt.
Photo: Reuters
Slumping global trade and slowing growth in China have sapped demand for shipping, forcing many companies worldwide to sell assets and cut jobs to stay afloat.
Hanjin faces a cash shortage of about 1 trillion won (US$900 million) needed to roll over debts. However, major creditors, including the state-run Korea Development Bank, on Tuesday decided not to offer more help.
They said the company failed to present a viable plan to turn around its business, which has been in the red every year since 2011 amid slowing demand in China and rising charter fees to shipowners.
Seoul, as part of a state-led drive to restructure ailing industries, has pressed shippers like Hanjin and the No. 2 Hyundai Merchant Marine Co to revamp their business and persuade creditors to extend loan terms.
Hyundai Merchant Marine avoided bankruptcy after reaching an agreement with creditors on a debt restructuring plan.
However, Hanjin failed to convince creditors. It posted a net loss of more than 473 billion won in the first half of this year alone, after racking up total net losses of about 1.2 trillion won over the past three years.
Hanjin’s fleet comprises 132 container ships and bulk carriers, of which it owns 59. It reported revenue of 7.6 trillion won last year, about a third of total revenue for the parent Hanjin Group.
The group has a range of logistics and transport businesses, including flag carrier Korean Air Lines Co.
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