SEOUL • South Korea's Hanjin Shipping filed for a court-led restructuring programme yesterday after creditor banks refused further financial help in a major blow to the country's top shipper.
Hanjin - the world's seventh largest shipping line by capacity - made a formal request to a Seoul court for court receivership, the firm said in a regulatory filing.
The court will decide whether to put Hanjin under a recovery programme, in which it supervises the ailing shipping line's management and reschedules debt payments, or to declare it bankrupt.
Slumping global trade and slowing growth in China have sapped demand for shipping, forcing many companies worldwide to sell assets and cut jobs to stay afloat.
"We have been seeing some reorganisation in the container industry and hopefully it can lead to fewer container lines with healthier balance sheets," said Mr Espen Fjermestad, an analyst at Fearnley Securities in Oslo.
"It could be healthy for the industry as a lot of companies have been stimulated with outside money for a long time to still exist despite heavy losses."
Hanjin's 5.9 per cent June 2017 local-currency notes fell to a record low 27.3 per cent of face value on Aug 30, Korea Exchange prices show. In Singapore, Neptune Orient Lines' September 2020 dollar bonds traded at 71.65 cents on the dollar.
Hanjin faces a cash shortage of about one trillion won (S$1.22 billion) needed to roll over debts. But main creditors, including the state- run Korea Development Bank, decided on Tuesday not to offer more help. They said the firm failed to present a viable plan to turn around its business, which has been in the red every year since 2011 amid slowing demand in China and rising charter fees to shipowners.
Seoul, as part of a state-led drive to restructure ailing industries, has pressed shipping firms like Hanjin and the No. 2 Hyundai Merchant Marine to revamp their business and persuade creditors to extend loan terms. Hyundai Merchant Marine avoided bankruptcy after reaching an agreement with creditors on a debt restructuring plan.
Hanjin posted a net loss of more than 473 billion won in the first half of this year, after racking up total net losses of about 1.2 trillion won over the past three years. Its fleet totals 132 container ships and bulk carriers, of which it owns 59. It had revenue of 7.6 trillion won last year, about a third of total revenue for the parent Hanjin Group. The group's logistics and transport businesses include Korean Air.
AGENCE FRANCE-PRESSE, BLOOMBERG