SEOUL (REUTERS) - The largest shareholder of Hanjin Shipping Ltd agreed on Wednesday (Sept 21) to lend 60 billion won (S$73.25 million) to help unload cargo that has been stranded since the world's seventh-largest container carrier collapsed late last month.
Korean Air Lines said it would make the previously pledged loan using Hanjin's accounts receivable as collateral, even as media reports said the South Korean court handling Hanjin's receivership doubted its ability to survive a restructuring.
The airline's loan is in addition to 40 billion won provided by the Hanjin Group's chairman, but the total is still short of the 173 billion won Hanjin estimated in a court submission this month that it needed to unload all cargo.
A rehabilitation plan for Hanjin is "realistically impossible" if top priority debt such as backlogged charter fees exceed 1 trillion won, the Seoul Central District Court said, the Yonhap News Agency reported on Wednesday.
Korean Air Lines did not say when the funds for unloading would be disbursed. It had announced the loan earlier this month but had not been able to reach agreement on collateral.
Hanjin must submit a rehabilitation plan to the court in December.
Hanjin has begun returning chartered vessels to their owners and had been trying to secure funds to help unload ships. An estimated US$14 billion of cargo was initially trapped on its ships around the world, creating havoc ahead of the crucial holiday shopping season.
Some 13 Hanjin container ships were waiting in international waters outside Busan port, according to latest Hanjin data, as South Korea's largest port struggled to accommodate vessels denied entry elsewhere and forced to sail home.
"It's a highly abnormal situation. Time is money for a shipper, so the more ships wait, the more losses," a Busan Port Authority spokeswoman said. "Some ships are waiting because they cannot leave for their destination."
At the Hanjin Newport section of Busan port, 78.6 per cent of container capacity was filled as of Wednesday morning, higher than the 60 per cent preferred for efficient operation, the port spokeswoman said. Of about 33,000 containers at Hanjin Newport, about 40 per cent held cargo.
Busan is one of a handful of major global ports where Hanjin ships can freely unload cargo without threat from creditors. South Korea's maritime ministry said earlier this month that Busan and Incheon port authorities will guarantee payments for most services offered to Hanjin Shipping vessels.
Hanjin was granted stay orders to protect its ships from seizure in South Korea, the United States, Japan, Britain and provisionally Singapore earlier this month, and is applying for stay orders elsewhere. However, dozens of ships remain anchored off ports while Hanjin tries to secure funds to unload cargo.
With debt of about 6 trillion won at the end of June and the South Korean government's unwillingness to mount a rescue, expectations are low that Hanjin Shipping will survive.
Top priority debt means claims for public interests, which are paid first to creditors and include cargo owners' damages and unpaid charter fees, Yonhap reported, citing the Seoul Central District Court.
Backlogged charter fees that occurred after Hanjin Shipping's court receivership have topped 40 billion won, while cargo owners' claims for damages are expected to begin in earnest after 3-4 weeks have passed from original delivery schedules, the report said.
Court officials were not immediately available for comment.
Shares in Hanjin dropped by more than a fifth to a record low after the court comments were reported, which lent support to the view the company will slide into liquidation. Shares of rival Hyundai Merchant Marine Co Ltd (HMM) rose 16 per cent to a near 2-week high.
On Wednesday, HMM said it would add a vessel on the Busan to Europe route starting Sept 29 to ease the capacity squeeze caused by Hanjin's collapse.
"HMM is the only national shipping company left to take care of what Hanjin Shipping was in charge of for now," said Cho Byung-hyun, an analyst at Yuanta Securities Korea. "The market is expecting HMM to take back Hanjin's pie from the industry though there is still some possibility that shipping companies from China, Taiwan, or Hong Kong would come in."