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Hanjin Group, the parent company of the near-bankrupt container line Hanjin Shipping, has some serious debt problems at its other companies, data showed Monday.

According to chaebul.com, an online corporate research firm, one-third of the group’s 38 units, or 12 companies, are “zombies,” which means they have paid-in capital already impaired by losses or are unable to cover interest costs with what they earn.

The group as a whole had debt at 450 percent of its total equity on average for the past three years. According to an analysis by chaebul.com, this was more than six times higher than the average of Korea’s top 10 business groups, at 70.5 percent.

The biggest problem is Hanjin Shipping, one of the group’s two core units, which is currently under court receivership. The firm appears to be fast sinking under debt, which at the end of June was worth over 1,100 percent of its equity capital.

Another of the group’s core unit, Korean Air, also has a debt ratio exceeding 1,100 percent, with its liabilities rising from 20.7 trillion won ($18.7 billion) to 21.4 trillion won partly as a result of its financial support of the ailing shipping affiliate. The flag carrier airline is the largest shareholder of Hanji Shipping.

Hanjin Group on Monday announced a plan to inject another 100 billion won of fresh funds into Hanjin Shipping, with 40 billion won to come from the private coffers of the group’s Chairman Cho Yang-ho.

Shares of Korean Air and its holding firm Hanjin KAL traded lower on the news, as investors feared financial contagion from the shipping crisis.


The South Korean government will extend a long-term loan of 100 billion won (US$90.54 million) to financially troubled Hanjin Shipping at low interest rate following its court receivership filing last week.
“The government agreed to provide cheap long-term loans to Hanjin Shipping if Hanjin Group or Chairman Cho Yang-ho offer loan securities that have asset value in Hanjin Shipping,” said Saenuri policy chief Kim Gwang-lim after attending a ruling party-government meeting on Sept. 6.

Kim said the amount of government’s financial support will be “100 billion won plus alpha,” which will enable the container carrier to dock its vessels and offload cargo.

Related ministries will also help Hanjin Shipping to seek stay orders in dozens of countries to protect its vessels from being seized.


John Gallagher, Special Correspondent | Sep 02, 2016 3:09PM EDT

Shipowners seeking to recoup losses from Hanjin Shipping are taking aim at the liner’s customers through lawsuits filed in Maryland and California.

Among those named in the lawsuits are the logistics companies APL Logistics, C.H. Robinson, and Expeditors International and container lines Hapag-Lloyd and NYK Line. Hanjin has a fleet of

98 container ships and the South Korean Ministry of Oceans and Fisheries estimates that as many as 540,000 twenty-foot-equivalent units are floating around on its vessels.


Montemp Maritime, a Liberian limited partnership with headquarters in London, on Wednesday filed suit against Hanjin for $1.69 million in late charter payments related to the 3,600-TEU Hanjin Louisiana.

The company said it expects to lose an extra $720,000 each month that Hanjin fails to make payments.


Montemp applied for attachment and garnishment under Supplemental Admiralty Rule B in federal district court for Central California, home of the ports of Long Beach, and in the district of

Maryland, where the Port of Baltimore is located.

It contends that 36 “garnishees” named in the suits, including the aforementioned liners and logistics companies, are located within the two districts.

Montemp’s filing seeks to attach “all of Hanjin’s tangible or intangible property or any other funds held by any garnishee, which are due and owing to Hanjin” up to at least the amount of the missed charter payments.

Hastay Marine, on behalf of ship management company Zodiac Maritime, filed a similar lawsuit related to the 3,600-TEU Hanjin New Jersey, saying Hanjin owed $1.38 million.

Hanjin may be able to shield itself from such lawsuits filed in the United States by using Chapter

15 of the US Bankruptcy Code, which can be used by non-US owners in foreign bankruptcy proceedings to protect a company’s assets within the United States.

Hanjin’s unexpected bankruptcy has already led to ship arrests, with three known so far known to have been arrested, with one in Singapore and two in China, and this number is expected to rise. Scores more Hanjin vessels are stuck outside ports from which they have been denied entry, or are tied up alongside with terminals refusing to work their cargo.

Contact John Gallagher at john.gallagher@ihsmarkit.com and follow him on Twitter:


Source URL:  http://www.joc.com/


Xiaolin Zeng | Sep 02, 2016 1:20AM EDT

In the wake of Hanjin Shipping’s move toward court protection, Hyundai Merchant Marine’s staff have been holding emergency meetings to arrange the deployment of container vessels to minimize disruptions to shipments booked with the ailing carrier.

Hyundai Merchant Marine will provide 13 replacement ships to substitute vessels affected by

Hanjin Shipping’s receivership application. This process is expected to be carried out until Sept. 7.

Hanjin Shipping, having accumulated debt of $5 billion, filed for court protection on Wednesday after local banks, dissatisfied with the liquidity plan submitted by South Korea’s largest shipping line, withdrew their support.

The Ministry of Oceans and Fisheries estimates that as many as 540,000 twenty-foot-equivalent

units are on Hanjin’s vessels and many could be delayed as ship arrests mount. Hanjin Rome has been arrested in Singapore while Hanjin Soohoo has been denied entry into Shanghai. China Cosco Shipping, one of Hanjin Shipping’s partners in the CKYHE Alliance, has ended their slot swap arrangement and other members of the alliance are not carrying Hanjin cargo.

HMM will deploy four 4,000-TEU ships on the trans-Pacific trade and nine 6,000-TEU ships on Asia-Europe. The first of these ships will begin sailing on Sept. 8 on the Gwangyang-Busan-Los Angeles route.

On Asia-Europe routes, HMM has been actively corresponding with shippers, and the plan is to call at only key European ports, although the schedules can be flexible according to shippers’ requirements.

“Emergency meetings will continue until the shipping issues are resolved. We will work closely with shippers to minimize disruptions to transportation,” HMM said.

Financial Services Commission chairman Yim Jong-ryong said that Korea Development Bank and HMM agreed on this as part of countermeasures designed to mitigate any fallout from Hanjin Shipping’s financial woes.

While HMM has been in discussions with some South Korean cargo interests, rates have been discussed and negotiated with other cargo owners. Freight rates would be kept at “reasonable levels” to prevent excessive burden on shippers.

“As much as the possibility of Hanjin Shipping being liquidated cannot be ruled out, Hyundai

Merchant Marine has been asked to consider acquiring the former’s valuable assets,” Yim said.

This step has been taken into consideration by the FSC in order to strengthen HMM’s medium- to long-term competitiveness.

HMM recently completed a remarkable escape from bankruptcy by raising sufficient liquidity, renegotiating charter costs and rescheduling bond repayments, and joining the 2M vessel-sharing agreement with Maersk Line and Mediterranean Shipping Co. South Korea’s No. 2 liner operator then entered into debt-for-equity swaps that saw its creditor banks, led by Korea Development Bank, assuming a 40 percent stake in the company. KDB is set to appoint a new CEO and management team on Sept. 20.

Contact Xiaolin Zeng at arachelle0@gmail.com.


Source URL:  http://www.joc.com/maritime-news/hyundai-deploys-ships-pick-stranded-hanjin-cargo_20160902.html?