Hanjin Shipping opts for creditor-led restructuring

By Park Sae-jin Posted : April 22, 2016, 16:48 Updated : April 22, 2016, 16:48

[Courtesy of Hanjin]


South Korea’s largest carrier Hanjin Shipping decided Friday to put it under creditor-led restructuring as its self-rescue plan has made slow progress in a prolonged business slump.

The move by Hanjin Shipping, one of the world's top ten container carriers in terms of capacity, came a day after Finance Minister Yoo Il-ho warned that Hyundai Merchant, the country's second-largest shipping company, could be put under a court receivership if it fails to lower lease rates paid to the owners of chartered ships.

The two shipping companies have been reeling from a snowballing debt. Hanjin's debt stands at 5.6 trillion won (4.9 billion US dollars), including 700 billion won held by banks, while Hyundai Merchant is saddled with a debt of about four billion dollars.

Creditors have urged them to ride out their liquidity crisis through aggressive restructuring and sales of non-core assets. Hyundai Merchant was put under co-management by creditors late last month, and its maturing debt was rolled over.

Hanjin is under pressure to reduce its debt ratio to less than 400 percent. The company is a subsidiary of the Hanjin Group controlled by Cho Yang-ho, who is also the chairman of South Korea's top carrier Korean Air.

Creditors have vowed to restructure the shipping industry after the two companies brought down charter fees and extend non-banking debts. Falling freight rates have been blamed for aggravating their financial woes.

Aju News Lim Chang-won = cwlim34@ajunews.com
  
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