Asia/Pacific News
Hanjin Shipping Seeks KRW500 Billion in Savings to Gain Eligibility to Government Fund
Hanjin Shipping Co. (Hanjin) has plans to ramp up debt restructuring to achieve KRW500 billion (430 million) in savings by 2021 in order to tap assistance from the Government of South Korea's fund.
As Ship & Bunker previously reported, the South Korean government announced the launch of a $1.2 billion investment fund intended to provide support to the country's shipping industry, although only companies that have debt-equity ratios of less than 400 percent are eligible.
With Hanjin Shipping - one of South Korea's largest carriers - reported to have had a debt-equity ratio of over 800 percent and a debt of KRW 6.64 trillion (5.7 billion) as of December 2015, critics question the sincerity of the government's efforts.
The savings are expected to be achieved through asset sales and a reduction in operating expense, with Hanjin saying Thursday that from April it will remove two 13,000 TEU capacity containerships on its Asia to North Europe lane as part of cost saving measures.
The company is said to have KRW500 billion ($418.3 million) in debt that must be repaid by June 2016.
Earlier this week, Ship & Bunker reported that Kim Young Moo, executive vice-chairman of the Korea Shipowners' Association (KSA) said the South Korean government is not doing enough to support shipowners' liquidity during the current challenging market, but with such support the struggling Hyundai Merchant Marine (HMM) and Hanjin Shipping could overcome their current crises.
