Hanjin pledges US$90m to resolve shipping cargo chaos
Hanjin Group will inject US$90 million, including US$36 million from its chairman Cho Yang-ho's personal assets, to help resolve disruptions to container cargo transport caused by Hanjin Shipping Company's financial troubles.
The move follows South Korean government demands that the parent company do more to help as Hanjin's vessels remain stranded outside ports after the company filed for bankruptcy protection last week.
Hanjin Shipping is seeking protection from creditors in dozens of countries, hoping to minimise seizures of its assets. With the company's assets frozen, its ships are being refused permission to offload or take on containers at ports worldwide, out of concern tugboat pilots or stevedores may not be paid. Out of 141 vessels the company operates, 68 were not operating normally, were stranded or seized, as of Sunday.
Late Tuesday, a federal judge temporarily granted the company's request to have bankruptcy protections from its South Korean proceedings recognised in the United States. Judge John Sherwood in Newark, New Jersey, ordered a hearing for today, Friday, to make sure that creditors are protected during the bankruptcy.
The world's seventh-largest ocean shipper, Hanjin Shipping is part of the Seoul-based Hanjin Group, a huge, family-dominated conglomerate, or chaebol, that also includes Korean Air.
The Hanjin Group said in a statement Tuesday that it will provide its stakes in overseas terminals, such as the one Hanjin operates in Long Beach, California, as collateral to borrow 60 billion won (US$54 million).
That still falls short of the fees that Hanjin Shipping must pay for services it needs to offload cargoes already on its vessels. According to local media reports, that amounts to 600 billion won (US$543 million).
It was unclear if banks or the government might provide more financing to resolve the immediate crisis.
In the meantime, South Korean regulators said they are directing Hanjin Shipping vessels to unload cargoes in a few key ports, including in Singapore and Hamburg, Germany.
With the country's largest ocean shipper idled and the shipbuilding industry also in crisis, a government task force is directing moves to salvage the container shipping sector, which, like ocean shipping worldwide, has been battered by weak demand and overcapacity.
Officials appear set on a consolidation, without committing huge sums of taxpayer cash, of Hanjin and its smaller rival, Hyundai Merchant Marine, which already is being restructured.
Hanjin Shipping was handling nearly eight per cent of the trans-Pacific trade volume for the US market, and with its container ships marooned offshore, major retailers have been scrambling to devise contingency plans to get their merchandise into stores.
The shipping company has posted net losses every year since 2011. Last week, creditors led by the Korea Development Bank rejected a plan by Hanjin Group to spend another 500 billion won (US$447.2 million) to rescue the shipping firm, way short of Hanjin Shipping's more than 6 trillion won (US$5.37 billion) in debts.
Local media reports said Wednesday that a South Korean court has asked Hanjin Shipping's main creditor, the state-owned Korea Development Bank, for emergency funding.
Port workers in Busan and Hanjin Shipping labour union officials held rallies Wednesday, urging the government, creditors and Hanjin Group to save the shipping company.