The South Korean government wants to prop up Hyundai Merchant Marine (HMM) and turn it into the country’s flagship carrier, even as the sale of compatriot liner Hanjin Shipping Co.’s assets has begun, local reports said.
According to the reports, the government and the Korea Development Bank (KDB) are going to provide support to HMM so it can fill the gap left by Hanjin Shipping, with ongoing consultations expected to be completed in mid-November.
Before filing for court receivership late August, Hanjin Shipping was ranked seventh largest container shipping line in the world, while HMM is currently not in the top 10 league.
Meanwhile, portions of cash-strapped Hanjin Shipping’s assets went up for sale on October 14 as the company struggles to raise the cash needed to repay debts and unpaid bills, according to Yonhap News.
The country’s No. 1 shipper currently under receivership got a nod from a local court the day before to sell its Asia-U.S. route, including manpower and vessels, and 10 overseas operations, the report said, citing industry sources.
The Seoul Central District Court will receive letters of interest from potential buyers by October 28. Potential bidders are required to offer final bids by November 4 and will be given chances to conduct due diligence.
The asset sale will be completed by the end of next month, but prices were not determined.
Ailing Hanjin Shipping was put under receivership early last month as its creditors, led by state-run KDB, rejected its latest self-rescue package worth KRW500 billion (US$440 million), which fell short of the KRW700 billion demanded by its creditors.
Its court receivership sent ripples through the global shipping network and left more than half of its ships stranded at sea.
Hanjin Shipping badly needs cash to repay debts and meet unpaid service bills. At the end of June, its debt reached KRW6 trillion.
Recently, Hanjin Shipping had secured some KRW110 billion in cash from its largest shareholder, Korean Air Lines Co. and Cho Yang-ho, chairman of Hanjin group, the parent firm for Hanjin.
The KDB also extended a credit line worth KRW50 billion to the embattled carrier to help it proceed with cargo offloading at ports around the globe.
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