South Korea’s Hanjin Shipping Co. said it has applied for approval from creditors to undertake restructuring measures in an attempt to bail itself out of its deep financial troubles.
The latest bid by the country’s largest shipping firm to extricate itself from a quagmire of growing debt comes as creditors have offered to help the cash-strapped shipper out of its financial predicament, according to a news report by Yonhap.
The creditors, led by state-run Korea Development Bank, will discuss early next month the shipper’s self-rescue plan and decide whether to approve the proposal.
If its plan is approved, the shipper’s maturing debts will be rolled over and part of them will be rescheduled.
Creditors have poured some KRW1 trillion (US$875 million) into the shipper since 2013, and Hanjin Shipping returned to the black last year through intensive restructuring efforts.
The company has been seeking to sell some of its assets, including treasury stocks and a building, to remedy its worsening financial health and repay maturing debts.
Hanjin Shipping has to pay off or refinance KRW500 billion worth of debt that matures in the first half of the year.
At the end of last year, Hanjin Shipping’s total debt reached KRW5.6 trillion.
Group chairman Cho Yang-ho has given up late last week management control of the group’s shipping unit, leaving the heavily indebted shipper in the hands of creditors, said Korea Times in a news report.
Hanjin Shipping and other local shippers have been struggling with falling freight rates amid a protracted slump in the world’s economy.
Its smaller local rival, Hyundai Merchant Marine Co. (HMM), was also given the option by creditors last month to conduct its own rescue plan.
Recently the government has been working to sort out the knotty financial situation of troubled firms in five sectors, including shipping and shipbuilding, in order to put them through painful restructuring.
Shipping companies are under heavy debt due to expensive rental fees paid to ship owners. The government is pushing HMM and Hanjin Shipping to cut these fees, as they had signed contracts establishing the fees with ship owners from the UK and Greece at a time when the industry was booming.
Separately, Hyundai Heavy Industries and other shipbuilders are also struggling to keep afloat, and plan massive layoffs as part of restructuring.
Photo: hyolee2
