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(LEAD) Hyundai Merchant may buy Hanjin's assets: regulator

All Headlines 14:43 August 31, 2016

(ATTN: UPDATES throughout with new information; CHANGES headline; ADDS bylines)
By Park Sang-soo and Lee Chi-dong

SEOUL, Aug. 31 (Yonhap) -- South Korea will prod Hyundai Merchant Marine Co. into acquiring some of its bigger but troubled local rival's assets, a top official said Wednesday, a move seen as a prelude to a de-facto merger of the two.

Jeong Eun-bo, vice chairman of the Financial Services Commission (FSC), described the idea as intended to stop the country's shipping industry from losing competitiveness.

Earlier in the day, Hanjin Shipping Co., the world's seventh-largest container carrier, decided to file for court receivership at a board meeting. On Tuesday, its creditors decided not to provide additional support for the cash-strapped firm.

"There is a worrying view that the competitiveness of the shipping sector, which is South Korea's key industry, will weaken due to the court receivership for Hanjin Shipping," Jeong said, as he presided over an emergency meeting to discuss ways to deal with the crisis.

The government plans to "actively push for" Hyundai Merchant to buy such healthy assets of Hanjin Shipping as ships, sales networks abroad and workforce, he added.

Creditors led by the state-run Korea Development Bank have recently taken control of Hyundai Merchant from Hyundai Group, as part of restructuring of the debt-heavy No. 2 South Korean shipper.

Hanjin Shipping has already handed over many of its core assets to other affiliates of the Hanjin Group in order to raise funds for self-restructuring efforts.

Among the assets sold are a 59-percent stake in the Pyeongtaek container terminal and a 50-percent stake in the new Busan port as well as the rights to operate on eight Asian cargo routes and a 21-percent stake in a Vietnamese terminal.

Hanjin Shipping still holds some ships, a relatively robust sales networks and the rights to run some terminals and freight routes.

With regard to worries about the potential impact of the Hanjin Shipping woes on the financial market, the official said, the authorities will keep close tabs on changes in the bond market and the related firms' capital situation, while seeking ways to help contractors of Hanjin Shipping.

In general, however, its fate, whatever it becomes, is likely to have a limited effect on the local financial market, he added.

Meanwhile, the maritime ministry said earlier in the day that it will work to help smooth flows in cargo trade for the local exporters and importers by putting in substitutes for Hanjin's vessels which may be seized by its creditors.

If Hanjin Shipping is put under court receivership, owners of chartered vessels will move to collect the ships and creditors will seize Hanjin's ships, according to the ministry.

The ministry estimated that the process of a total of 540,000 twenty foot equivalent (TEU) containers may be delayed, and shipping goods to overseas countries may be difficult for the next three months.

The ministry also said it would consult with related agencies to map out a comprehensive measure to foster the competitiveness of the local shipping industry.

lcd@yna.co.kr
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