Hanjin Shipping Remains Tight-Lipped Amidst Bankruptcy Talks in Media (and Updates)

Hanjin_container_ship

Source: http://www.wikipedia.org/

UPDATE (8/31/2016): Hanjin Shipping has officially filed for receivership and industry pundits are now speculating a Hanjin Shipping, Hyundai Merchant Marine (HMM) merger might be considered. The Korea Shipowners Association suggested that their has been national interest in this route.

As of now, the Korea Exchange has suspended the trading of Hanjin Shipping shares indefinitely after its stock price fell 24.16 percent and reached a 1,240 won ($1.11) low. This nadir resulted from the media reports of creditors pulling out of the company and that the company will be applying for receivership and court protection. Most experts in the industry are shocked by the revelation, as Hanjin Shipping themselves pointed out the progress they have made with partners in lowering charter rates and deferring loan payments to foreign banks, which eased many uneasy investors. Both the Korea Exchange and the government are now awaiting an official decision from the company on whether they will file for court protection or not.

It was just last week when Hanjin Shipping proposed a liquidation plan to their main creditor, the Korea Development Bank, which is also supporting Hyundai Merchant Marine. The plan included a capital increase from Korean Air Lines and other affiliated companies of 500 billion won, but it seems to have been rejected by the bank. The Hanjin Group continues to fully support its subsidiary, with all efforts now put into normalizing Hanjin Shipping. Despite their intention, it might be too late to revive the shipping company’s good standing. As of June 30, Hanjin Shipping had a working capital deficit of 3.38 trillion won and was looking a liquidity shortage of 1.2 trillion won over the next two years. No doubt the industry’s flopped quarter hastened this outcome, in which Hanjin Shipping suffered a 212 billion won loss.

Once news broke out of Hanjin Shipping’s possible bankruptcy, civic organizations quickly gathered in Busan to rally for the shipping company. Supporters claim that Hanjin Shipping’s condition necessitates government intervention, and that letting the company go bankrupt would be a devastating blow to the South Korean economy. The organizations credit the company for developing the logistics and shipping sectors of South Korea and hopes that the government will take action to prevent the looming bankruptcy.

 

Additional Information:

Hanjin Group Promises to Back Liner as Creditors Seen Exiting (JOC)

Hanjin Shipping Nears Bankruptcy After Creditors End Support (WSJ)

Hanjin Shipping Gets Breathing Room (American Shipper)

Korea’s Hanjin Shipping Becomes Symbol of Industry in Trouble (Bloomberg)