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HANJIN SHIPPING IN RECEIVERSHIP

Aug 31 2016

South Korea's biggest shipping group Hanjin has filed for receivership today after its creditors refused to provide further funding to the indebted firm. Hanjin's board unanimously agreed to make the court filing, a company spokesman said. It faces a cash shortage after failing to persuade key lenders to reschedule debt under a new restructuring plan.Shares of Hanjin remain suspended in Seoul after plunging by as much as 29% on Tuesday. Hanjin, which is also the world's seventh-largest container line, has been unprofitable for four of the last five years.

Hanjin may get some financial relief courtesy of rival Hyundai Merchant Marine (HMM). Shares of HMM jumped by as much as 22% after Korea's financial regulator said the firm may buy some of Hanjin's assets. However HMM hasn't been spared from the woes bedevilling the sector. It recently announced a reorganisation plan too. South Korea's shipping and shipbuilding industry is one of the hardest-hit by a prolonged downturn in global trade.

This event will impact available capacity for shippers in general and specifically for those with cargo already loaded to Hanjin vessels where there may be complications in receiving freight in a timely manner. There are reports that some ports are refusing Hanjin vessels entry or that vessels already docked are being held while the situation with receivers is made clear.

 

 

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