Hanjin shares dive on news shipping firm to shut down European business as demand slumps

A tugboat passes Hanjin Hungary container ship at PSA's Tanjong Pagar terminal in Singapore on Sept 28, 2016.
A tugboat passes Hanjin Hungary container ship at PSA's Tanjong Pagar terminal in Singapore on Sept 28, 2016.PHOTO: REUTERS

SINGAPORE (AFP,BLOOMBERG) - Shares in the troubled South Korean shipping giant Hanjin plunged almost 14 per cent on Monday (Oct 24) after it said it would close its European business.

The firm said it had applied for court approval to close all of its European units in more than 10 countries including Germany, where it has its regional headquarters, a spokeswoman said.

Hanjin - the South's largest shipping company and once the world's seventh largest - is seeking bankruptcy protection at home and in the US after creditors rejected a plan to deal with a US$5.37 billion debt load.

Its bankruptcy would be by far the largest in the history of container shipping, which is suffering its worst downturn in six decades owing to slumping global trade and a slowdown in China.

The company expects to start the closure process this week after obtaining approval from the Seoul Central District Court, the spokeswoman said.

The news sent its share price 13.9 per cent to 982 won at one point in Seoul morning trade before paring the losses slightly to sit at 1,000 won.

Almost 80 per cent of Hanjin's market value has been wiped out in the past year.

Under the Seoul court receivership, the company must submit a business revival plan by Nov 25 before the it decides whether to put it under a recovery programme or declare it bankrupt.

Hanjin has been hit hard by the slump in global trade, especially over the past three years.

It posted a net loss of more than 473 billion won in the first half of this year alone, after racking up total net losses of about 1.2 trillion won over the past three years.

Hanjin is also seeking separate bids from shipping companies to buy its Asia-US network as well as its 54 per cent stake in a terminal in Long Beach, California.