Hanjin’s shares jumped 20 percent on Tuesday on hopes for government help for the company, after falling 13.7 percent on Monday.
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Hanjin is ranked as the world’s ninth largest container shipping company, transporting over 100 million tons of cargo a year.
Hanjin filed for bankruptcy in the US and South Korea last week. “So those toys held up in container boxes will be able find their way to consumers”.
To many South Koreans, Hanjin’s woes are typical of the difficulties chaebol are facing as offspring of the founding generation fumble in their attempts to keep control of their fathers’ and grandfathers’ business empires. The stock is now more than 40 percent from a month ago and 80 percent down over the year.
Yim Jong-yong, the Financial Services Commission’s chairman, pushed Hanjin to move quickly to clear the logjam of freight stranded at sea, urging major shareholders and Cho Yang-ho, chairman of Hanjin Group and Korean Air Lines, to take responsibility.
But Hanjin Group can not afford to seek out new loans for the shipping unit that it has given up as its flagship company Korean Air too sits on astronomical debt ratio of 1,082 percent.
The filing will prevent creditors from seizing Hanjin’s USA assets and block them from launching further legal action, while the company undergoes restructuring in Korea.
All companies involved in serving Hanjin vessels, such as fuel and food suppliers, will most likely demand advance payments and guarantees before continuing cooperation, Seydlitz- Kurzbach said. Offloading the containers would help Hanjin Shipping’s clients like LG Electronics Inc. get their goods back on land and transported via other ships or by road to their customers.
Last week, Hanjin, the world’s seventh and South Korea’s largest shipping firm, filed for bankruptcy in Seoul, seeking court protection after creditors rejected its latest plan for dealing with a hulking $5.37 billion debt. A drop in a company’s credit rating raises the interest rate of financing, creating a vicious cycle which will have a negative impact on the company’s financial health.
The shipping line had total current liabilities of 6.03 trillion won as of June 30, compared with total current assets of 6.62 trillion won, according to another filing. If recognized by the USA court, the chapter 15 filing will block creditors in the US from seizing the company’s assets or launching other legal actions while its foreign bankruptcy proceedings are under way.
Officials appear set on a consolidation, without committing huge sums of taxpayer cash, of Hanjin and its smaller rival, Hyundai Merchant Marine, which already is being restructured.
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The confusion might sink some trucking firms that contract with Hanjin to deliver cargo containers carrying everything from electronics to auto parts from ports to company loading bays.
