Hanjin gets conditional bailout
A KEY member of South Korea’s Hanjin Group has agreed to a conditional bailout of the group’s shipping unit, whose collapse has sparked turmoil worldwide on the high seas.
The board of group unit Korean Air, meeting for the third straight day, decided to lend 60 billion won (US$55 million) to Hanjin Shipping, two-thirds of whose cargo fleet is marooned at sea due to huge debts.
“The board decided to provide the loan but only in exchange for collateral [from Hanjin Shipping],” a company spokesperson told AFP.
It remained unclear whether the badly indebted Hanjin Shipping could provide matching collateral.
The company is seeking bankruptcy protection at home and in the US after creditors rejected its latest plan to deal with a $5.37 billion debt.
Its bankruptcy would be by far the largest in the history of container shipping, which is suffering its worst downturn in six decades because of slumping global trade and a slowdown in China.
Hanjin Group announced last week that it would inject 100 billion won, including a personal donation of 40 billion won from its chair and biggest shareholder Cho Yang-Ho, to help the shipping unit.
The remainder would come from Korean Air.
As of September 9, 92 of the 141 ships being operated by the world’s seventh largest shipping firm were stranded at sea.
They have been banned from docking in the US, China and many other countries until there are guarantees of payment for service firms and port workers.
The freight on the 92 ships is reportedly worth $14 billion, the Chosun Ilbo daily said. Much of it is destined for US stores before the Thanksgiving and Christmas shopping spree.
The Hanjin Greece container ship is docked for unloading at the Port of Long Beach, California, on September 10 after being stranded at sea for more than a week for fear that it could be seized by creditors if it came to shore. A Hanjin Shipping spokesperson said a US court had issued an order allowing it to unload some cargo without fear of creditors seizing its ships.