State-run Korea Development Bank, its main creditor, and other local lenders on Tuesday said Hanjin’s self-rescue packages fell short of their demands, sending the company’s shares down as much as 29%.
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Yonhap reports the shipper as saying that the shipping industry is very important for the national economy, adding “the government and the creditors’ help is desperate”.
But the creditors said Hanjin would need at least one trillion won in short-term liquidity to pay back maturing debt and cover arrears in payment to chartered shipowners as well as funding for operations.
Those firms include Daewoo Shipbuilding & Marine Engineering Co Ltd, which is almost half-owned by KDB following a bailout after the Asian financial crisis of the late 1990s.
“KDB can no longer be seen as wasting taxpayer money after their previous bailout (of Daewoo) failed”.
Daewoo Shipbuilding, which lost about $1 billion in the first half the year and plans to sell shares to raise funds by the end of the year, has roughly 40,000 staff and contractors in South Korea, while Hanjin has 1,428 South Korean employees as of end-June, according to the company.
“The risk of the company destabilizing the financial market is quite low”, he said.
Hanjin Shipping, now under a creditor-led restructuring scheme, has made little progress in its negotiations with owners of its chartered fleet to cut leasing rates, one of the key prerequisites set out by creditors to avert receivership. Hanjin Shipping submits another version on Friday.
According to the KDB, Hanjin Shipping said it would secure 400 billion won by selling stocks to its affiliate Korea Air Lines Co.
Local banks’ credit exposure to Hanjin is estimated at 1.02 trillion won (US$915 million), but they have already set aside sufficient provisions against the loans.
Shares of rival Hyundai Merchant Marine Co., which is under the control of creditors in a revamp, jumped 5.5 percent to 7,290 won as of 3:03 p.m.in Seoul and were headed for the biggest gain in two months.
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Shares in Korean Air Lines, Hanjin Shipping’s biggest shareholder, were up more than 6 percent on Tuesday. Hanjin Shipping, unprofitable in four of the past five years, has a market value of 304 billion won, according to data compiled by Bloomberg.
