Hanjin Shipping shares slump after report company may halve its fleet

A Hanjin container ship, Hangjin Rome, as seen from the eastern part of Singapore on Sept 17, 2016.
A Hanjin container ship, Hangjin Rome, as seen from the eastern part of Singapore on Sept 17, 2016. ST PHOTO: WONG KWAI CHOW

SEOUL (BLOOMBERG) - Shares of Hanjin Shipping Co slumped in Seoul after a report the troubled company, which has applied for court receivership, may have to cut its fleet size to less than 50 per cent.

The stock slid 6.6 per cent to 1,200 won as of 10:40 am local time on Monday (Sept 19), headed for the biggest drop in two weeks. The Wall Street Journal said South Korea's biggest container shipping firm is working on a plan that requires more than halving its fleet, and the most likely scenario is that it will be liquidated. The nation's Financial Services Commission had on Sept 1 said the possibility of liquidation can't be ruled out. Hanjin Shipping declined to comment.

A court in Seoul is hearing Hanjin Shipping's application for receivership and will decide whether the distressed company could be revived or it needs to be liquidated. The collapse of the firm will probably spark fresh consolidation among container lines as they attempt to ride out shock waves faced by the industry, Germany's No. 1 carrier Hapag-Lloyd AG said last week.

Shares of Hanjin Shipping have tumbled 67 per cent this year compared with a 2.5 per cent gain in the benchmark Kospi index.