[Photo by Yoo Dae-gil = dbeorlf123@]
An association of South Korean shipowners warned Monday that putting Hanjin Shipping, the country's largest container carrier, under court receivership could create a chaotic situation in global cargo delivery and a huge amount of losses.
Korea Shipowners' Association (KSA) vice chairman Kim Young-moo called for a quick and continued supply of credit to keep afloat Hanjin, the troubled arm of South Korea's Hanjin Group, saying court receivership would probably mean the company's liquidation.
Financial regulators have warned the shipping line should stand on its own feet or face court receivership.
"If Hanjin shipping is placed under court receivership, it has no other choice but to be liquidated," Kim told a seminar as creditors remain lukewarm to Hanjin's new self-rescue plan presented last week.
"It may bring to a halt the planned delivery of 1.2 million containers scattered around the world, leading to a great logistical disturbance," he said, adding Hanjin should not be simply treated as a private company.
Kim urged creditors to rescue Hanjin first and combine it later with the country's second largest container carrier, Hyundai Merchant & Marine, so that domestic shipping lines could recover their competitive edge in the global market.
On Sunday, Hanjin said that significant progress has been made in negotiations with the owners of chartered ships over a cut in leasing rates and also on the proposed postponement of debt repayments to foreign creditors.
Hanjin said the good news came from its crucial client, Seaspan, which has agreed to cut leasing rates. There have been no official words from Seaspan, which has been reluctant to renegotiate its contracts because that could open the door for other shippers to ask for charter relief, at a time when average box freight rates are at record lows.
Seaspan's rate cut may help Hanjin save some 800 billion won (711 million US dollars), Hanjin said, adding it is also expected to see good results in delaying loan repayments.
Hanjin's new self-rescue plan submitted last week includes sales of more assets and a capital infusion by its major shareholders, including Korean Air. The company offered to raise 400 billion won by selling stocks to Korea Air, though creditors want Hanjin to cover some 700-900 billion won.
The group's ruling family also has been under pressure from creditors to donate more money for corporate restructuring.
Hanjin Shipping needs at least one trillion won in its short-term liquidity to pay back debt and cover arrears in payment to chartered ship owners as well as operational funds.
But its viability was called into question after the company's second-quarter operating loss widened to 228.9 billion won from 115.8 billion won in the previous quarter.
Aju News Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
