South Korea’s Hanjin Shipping filed for a court-led restructuring programme Wednesday after creditor banks refused further financial help in a major blow to the country’s top shipper.
Hanjin Shipping – the world’s 7th-largest shipping line by capacity – made a formal request to a Seoul court for court receivership Wednesday afternoon, the firm said in a regulatory filing.
The court will decide whether to put Hanjin under a recovery programme, in which it supervises the ailing shipper’s management and reschedules debt payments, or to declare it bankrupt.
Slumping global trade and slowing growth in China has sapped demand for shipping, forcing many companies worldwide to sell assets and cut jobs to stay afloat.
Hanjin faces a cash shortage of about 1 trillion won (Dh3.3 billion) needed to roll over debts. But major creditors including the state-run Korea Development Bank decided on Tuesday not to offer more help.
They said the firm failed to present a viable plan to turn around its business, which has been in the red every year since 2011 amid slowing demand in China and rising charter fees to shipowners.
Seoul, as part of a state-led drive to restructure ailing industries, has pressed shippers such as Hanjin and the number two Hyundai Merchant Marine to revamp their business and persuade creditors to extend loan terms.
Hyundai Merchant Marine avoided bankruptcy after reaching an agreement with creditors on a debt restructuring plan.
But Hanjin failed to convince creditors. It posted a net loss of more than 473bn won in the first half of this year alone, after racking up total net losses of about 1.2tn won over the past three years.
Hanjin’s fleet totals 132 container ships and bulk carriers, of which it owns 59. It reported revenue of 7.6tn won last year, about a third of total revenue for the parent Hanjin Group.
The group has a range of logistics and transport businesses including flag carrier Korean Air.
Korean Air said Hanjin filing for recievership means the carrier could suffer losses reaching 383bn won.
About 273.4bn won of the total could come from a decline in the value of holdings of Hanjin Shipping stocks and bonds, South Korea’s national flag carrier said in a regulatory filing.
Korean Air Lines is Hanjin Shipping’s largest shareholder.
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