Hanjin Shipping May Get OK for Restructuring
South Korea’s largest container operator by capacity Hanjin Shipping's creditors are expected to approve a corporate rehabilitation program for the struggling container line, local media reports suggest.
Creditor banks of cash-strapped Hanjin are likely to give the ailing container carrier a chance to avoid bankruptcy by approving a corporate rehabilitation program, reports Korea Herald.
Seven lenders, led by state-run Korea Development Bank, are expected to allow the country’s No. 1 shipper to undergo rehabilitation Wednesday, after the company submitted a formal request to restructure its debt on April 29, according to sources.
Facing a 5.6 trillion won ($4.9 billion) wall of debt, the company said it would raise about 410 billion won by selling stakes in the bulk-shipping and other units as well as some property, but creditors requested a more detailed self-help plan.
The plans are likely to include asset sales, wage freezes and like compatriot Korean line Hyundai Merchant Marine (HMM) Hanjin is likely to enter negotiations with tonnage providers to try and lower the rates of its chartered in fleet.
Hanjin Shipping is known to have included more drastic measures such as wage cuts and asset sales in its voluntary restructuring proposal to creditors, but there is a bumpy road ahead for the struggling shipping company to keep its business afloat.
The company reached out to owners of its chartered fleet and terminal operators to say it can’t survive unless they help with its debt-restructuring efforts.
In a letter to foreign owners, Chief Executive Suk Tae-soo said the debt-saddled operator faces serious challenges as the global shipping industry is in the doldrums.
Meanwhile, Hanjin and Hyundai Merchant Marine have confirmed they are in discussions with other container lines on forming alliances when their current alliance agreements expire in 2017, assuming they survive their current liquidity crises.
Hanjin, a unit of Hanjin Group, which also controls Korean Air Lines Co., last week submitted a formal request to state-run Korea Development Bank, its main creditor, to restructure its debt and provide an aid package in return for asset sales and charter rate cuts.
