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(LEAD) Hanjin Shipping files for receivership

All Headlines 16:18 August 31, 2016

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SEOUL, Aug. 31 (Yonhap) -- Cash-strapped Hanjin Shipping Co. said Wednesday that it has filed for court protection as its creditors decided not to extend additional support.

On Tuesday, the creditors, led by the state-run Korea Development Bank, reached a consensus that they would not infuse additional cash into the country's No. 1 shipping line.

A creditor-led restructuring scheme for the largest South Korean shipper is set to end Sept. 4.

The creditors have been ratcheting up pressure on the world's seventh-largest shipping line to roll out stronger self-rescue plans with a threat to put it under receivership.

But Hanjin Shipping's latest restructuring scheme centered on an infusion of 400 billion won (US$357 million) from its largest shareholder, Korean Air Lines, fell short of the demands of creditors, which have asked for at least 600 billion won.

Hanjin Shipping has been striving to cut its chartered rates and extend maturity of debts in the face of its worsening financial health stemming from a continued fall in freight rates.

Meanwhile, the government said it will prod Hyundai Merchant Marine Co. into acquiring some of its bigger but troubled local rival's assets.

"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 Eun-bo 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.

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

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.

sam@yna.co.kr
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