[Aju News DB]
Hanjin Group boss Cho Yang-ho and his family have agreed to donate their personal wealth and chip in some 24.7 billion won (21 million US dollars) for an unusual investment to recapitalize the holding company of the family-run conglomerate stricken with a liquidity crisis at its shipping unit.
Hanjin KAL, a key unit used by Cho to control the group, said in a regulatory filing Wednesday that the investment would come from Cho, three family members, and Jungseok-Inha School's Foundation. The group established Hanjin KAL through a horizontal spin-off of Korean Air, converting it into a holding company system, in 2013.
On Tuesday, Cho sold part of his stake in Jungseok Enterprise, a group unit, for 25 billion won, amid speculation among market watchers that he may have to inject his personal wealth into Hanjin Shipping, the world's night container carrier in terms of capacity, which has been put under creditor-led restructuring.
Cho's younger brother had run Hanjin Shipping until he died in 2006. By virtue of Cho's authority, Korean Air, the country's largest flag carrier, acquired a controlling 33.2 percent stake in the shipping unit in 2014 as it was reeling under a credit crunch aggravated by snowballing debts and falling freight rates.
Like other tycoons who control their family-run conglomerates through a complex web of cross-shareholdings, the Cho family controls 29.8 percent in Hanjin KAL which has 31.46 percent in Korean Air.
To receive a new bailout fund from creditors, Hanjin Shipping is under pressure to step up the sale of non-core assets, lower chartered ship fees and extend the maturity of loans held by non-banking institutions. Cho has already offered to abandon managerial control of the shipping unit as he was tied up with his work to reform Korean Air and other group units.
Korean Air has seen its financial woes aggravated by the continued injection of liquidity into the shipping unit.
Anxiety is growing among Korean Air's shareholders because Hanjin Shipping has sucked nearly one trillion won from the airliner. However, creditors are adamant that they will not extend fresh loans to Hanjin Shipping until Cho presents a complete rehabilitation program.
With its debt estimated at 5.6 trillion won, the shipping unit needs at least one trillion won in its short-term liquidity to cover arrears in payment to chartered ship owners as well as operational funds.
For its long-term survival under the supervision of creditors, Hanjin Shipping should seek a quick settlement in negotiations with the owners of 58 chartered vessels.
Aju News Lim Chang-won
reporter
Park Sae-jin
swatchsjp@ajunews.com
