In International Shipping News 20/09/2016
A South Korean bankruptcy court on Monday ordered Hanjin Shipping Co. to return the ships it charters back to their owners and to sell as many of its own ships as possible, in the strongest signal yet that the debt-ridden Korean carrier will be either liquidated or turned into a much smaller company.
“They are in a desperate search for cash to unload cargo, which is their immediate problem,” said Basil Karatzas, of New York-based Karatzas Marine Advisors & Co. “They are returning the chartered vessels to stop the cash bleeding in the short-term and outstanding claims by the owners will be settled when the company is liquidated which is the most likely scenario.”
The Wall Street Journal reported Friday that Hanjin, which has filed for bankruptcy protection in courts in the U.S. and Seoul, is working on a restructuring plan, that if approved by court, will see it keep a maximum 15 of its 37-owned ships and return to owners almost all of its 60 chartered vessels. Hanjin is the world’s seventh-biggest container operator by capacity.
Hanjin is losing at least $2 million a day by keeping the chartered fleet, freight brokers estimate. Hanjin spokeswoman Min Park said on Monday that Hanjin had returned four ships to their owners and will turn over the rest once they unload their cargo.
The South Korean government has strongly indicated it has no plans to bail out the company.
The Korean court will decide in December whether to accept the restructuring plan or let the company go under, according to court officials in Seoul.
Ms. Park said that nearly one-third of Hanjin’s ships that had been waiting to dock around the world have unloaded their cargo, raising hopes that anxious retailers will get their goods in time for the year-end holiday season.
Hanjin, which is South Korea’s largest shipping company, said 28 vessels have finished unloading at ports in California, Spain and other parts of the world. Another 34 remained stranded at sea for fear that if they dock they will be seized by creditors. Another 35 were on their way back to Korea.
Brokers said only about $2 billion of the estimated $14 billion in cargo stranded at sea when Hanjin filed for bankruptcy protection last month has been unloaded.
Although some ships are able to dock, Hanjin doesn’t have the money to pay to unload the cargo and move it to its final destination, one broker said. “It will be easier for ships docking in Korea to unload cargo, but there is a lot of uncertainty with ships drifting off ports in other countries.”
Ms. Park said the company was negotiating with port authorities in New York, Singapore and Manzanillo, Mexico, to start unloading additional cargo sometime this week.
“Both the company and the [South Korean] government are in talks with foreign authorities to solve much of the cargo crisis over the next few weeks and we’re making progress,” she said.
Hanjin said it has managed to accomplish some of the unloading through court actions and, in some cases, by agreeing to pay dockworker wages up front.
The Korean government said it has asked courts to protect Hanjin ships from being seized in Spain, Germany, the Netherlands and Italy. It plans to do the same in coming days in countries including Australia, India and the United Arab Emirates. Such legal protections are already in place in South Korea, the U.S., Japan, and the U.K.
Meanwhile, Korean Air Lines Co., the flagship unit of conglomerate Hanjin Group and the largest shareholder of the troubled shipping affiliate, hasn’t decided how it will disburse the 60 billion won ($53.3 million) it promised to lend Hanjin Shipping to help ease the cargo chaos.
The planned cash injection is part of Hanjin Group’s pledge earlier this month to put up a total of 100 billion won, including 40 billion won from the group chairman’s personal wealth, to help the shipping line.
Chairman Cho Yang-ho gave 40 billion won to Hanjin Shipping last week.
Korean Air has said it would secure the remaining 60 billion won, using the group’s stakes in terminals such as the one in Long Beach, Calif., as collateral.
Korean Air said it would hold a board meeting soon to complete the matter.
Hanjin moves roughly 3% of containers globally and up to 10% of those shipped between Asia and Europe. Some 25,000 containers cross the Pacific Ocean daily on Hanjin ships.
“If the restructuring plan is accepted by court, Hanjin will emerge as a ghost of its former self,” said Lars Jensen, chief executive of Copenhagen-based SeaIntelligence Consulting. “It will be a small operator on a limited number inter-Asia trades.”
Source: Wall Street Journal
