Korea Herald News

South Korean shipbuilder Samsung Heavy Industries has won what has been described as the company's largest-ever single order.The shipbuilder said Monday it had secured an order worth around KRW 2,8 trillion, which is approximately $USD 2,5 billion.The contract is for the supply of "blocks and equipment" and is with an unnamed European shipowner.In a brief statement on the Korea Exchange, Samsung said that the contract start date was November 20, 2020, and the end date December 31, 2025.

South Korea's top shipbuilding conglomerate Hyundai Heavy Industries (HHI) Group said that its holding company HHI Holdings Co will receive 1.4 trillion won ($1.24 billion) in proceeds next month from the sale of a stake in its refining unit, Hyundai Oilbank.In April, state-owned Saudi Aramco had agreed to buy a 17 percent stake in HHIs oil processing operations.Hyundai Heavy Industries Holdings said in a regulatory filing that it had signed a sales agreement with Saudi Aramco that included an option for Aramco to buy an additional 2.9 percent stake in Hyundai Oilbank.According to a report in Korea Herald, Saudi Aramco recently told Hyundai Heavy that it has earned regulatory approval for the deal from antitrust regulators in various countries…

Ørsted A/S, the world’s largest offshore wind power producer, said it sees high potential in the Korean offshore wind power market, intending to build long-term, sustainable relationships with the Korean government and companies.“South Korea is a peninsula surrounded by three seas,” said Park Jung-min, head of the Korean market development at Ørsted Asia Pacific. “We estimate that South Korea’s potential offshore wind power capacity can reach 30 GW.”According to Yonhap News Agency, the Danish state-run energy firm has recently completed the establishment of its Korean branch following South Korea’s announcement of a “Renewable Energy 3020 Plan…

Though South Korea’s big three shipbuilders -Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering, and Samsung Heavy Industries - showing signs of fiscal recovery this year,  orders at midsized shipbuilding companies remain sparse. Korea Herald reported citing  Korea Export-Import Bank of Korea that the order receipts of medium-sized shipyards in Korea were estimated to be around $110 million in the first quarter. Despite an improvement compared to last year’s first quarter, when there was not a single order, ship orders for the countries eight mid-sized shipbuilders are insufficient compared to the top three. Korea’s big three received a total of 36 vessel orders worth $3.48 billion so far this year.

The upcoming reorganization of global shipping alliances is likely to hit Korea’s largest port in Busan and  the harbor volume of Busan Port is expected to drop by 3.5 percent from next year, the Korea Herald reported quoting Korea Maritime Institute (KMI)’s report. KMI  announced on December 22 that as a result of the analysis of the port rotation adjustment plans formulated by the soon-to-be-established shipping alliances "Ocean" and "THE Alliance," the number of shipping services using the port of Busan is likely to decline by three compared to the current figures. Busan Port managed containers of more than 10 million twenty-foot equivalent units last year. Of those, the Asia-North America route accounted for 36.7 percent while the Asia-Europe shipping line made up 6.7 percent.

Hyundai Heavy Industries Co. (HHI), a major shipyard in South Korea, looks set to clinch a deal with Iran to supply 10 ships, says a report in Yonhap. The contract, valued at USD650 million, will see Hyundai supply the Islamic Republic of Iran Shipping Lines, (IRISL) with four 14,400 TEU container ships and six 50,000 DWT product tankers, the Korea Herald reported. The vessels are expected to be delivered to Iran in the third quarter of 2018. If signed, the contract will be Iran's first deal with a foreign shipbuilder since the lifting of international sanctions on the Middle Eastern nation. Iran is seeking a series of ship-related contracts via the IRISL to handle increasing trade cargo. Yonhap reported that Hyundai officials were cautious about the matter.

Hyundai Merchant Marine (HMM) has denied reports that it failed to join the global shipping alliance 2M  that the company has sought for months as part of its normalization plan. According to Yonhap, "We are still in negotiations (with 2M) to iron out differences," said an official at Hyundai Merchant. Since May, Hyundai Merchant has been seeking to become a member of 2M, the world's largest shipping alliance, one of the prerequisites set by its creditors to avert court receivership, says Korea Herald. This was part of the conditions requested by the firm’s creditors earlier this year to normalize its business. The Korea Development Bank and other creditors promised debt-to equity swap if the shipper meets all the conditions.

The value of contracts signed by Korea's big-three shipbuilders— Hyundai Heavy Industries, Daewoo Shipbuilding and Marine Engineering, and Samsung Heavy Industries — fell far behind the amount they projected for this year, reports The Korea Herald. Meanwhile, Arirang reported that the third quarter earnings of Korea's top 3 are likely to be in the black. Samsung Heavy Industries did not sell a single vessel during the first eight months of this year. Its yearly outcome, however, may differ as the company is currently negotiating a deal worth as much as $2.7 billion. The pitch came after the firm announced its plan to issue new stocks to increase capital.

South Korea's state-run banks are expected to raise more than 3 trillion won (US$2.64 billion) to prevent Daewoo Shipbuilding and Marine Engineering (DSME) from being delisted, reports Korea Herald. Both are reportedly planning to draw up detailed plans within the month. The funds will be injected into the ailing shipbuilder through debt-equity swap or by purchasing newly issued shares. Meanwhile, Pulse reported that despite a recent outside audit report questioning the viability of DSME, the Korean government along with the banks are determined to turn the shipbuilder around instead of sending it to the bankruptcy court for reorganization.

Around 50 ships owned by or related to North Korea have reflagged in Tanzania since the United Nations Security Council adopted its strongest-ever resolution on the country in March, in an apparent attempt to circumvent the sanctions. "The change of nationality into Tanzania comes in violation of the UNSC resolution," a report in Korea Herald said, indicating Resolution 2270's ban on North Korean ships sailing under the flag of other countries. The group of vessels includes one ship blacklisted by the U.N.'s sanctions committee and the U.S. Department of the Treasury, the Washington, D.C.-based NK News said, citing European shipping database Equasis and Port State Control.

Concerns were growing again over liquidity woes of Soth Korea's largest shipbuilder Daewoo Shipbuilding and Marine Engineering (DSME), as the Angolan oil major Sonangol EP is likely to delay the takeover of its drill ships once again. According to The Korea Herald, DSME was planning to deliver the two drill ships to Angola’s state-run oil company Sonangol by this month to receive the remaining contract fee of $1 billion. The South Korean shipbuilder has completed building two drill ships, set to be delivered in June and July, respectively, but due to financial difficulties, the Angolan company has postponed the delivery. The companies have agreed to push the transaction date to end-September, but the takeover is being postponed again.

A container ship owned by bankrupt Hanjin Shipping Co Ltd idled for days off the Southern California coast was allowed to dock in Long Beach and begin unloading cargo early Saturday, reports Reuters. The Hanjin Greece docked at the Port of Long Beach in California early Saturday morning and workers were hauling off containers of products destined for U.S. retailers, labor union officials said. The Greece was allowed to dock after U.S. and Korean bankruptcy courts allowed Hanjin to spend $10 million to unload that ship and others, according to Reuters. The Greece was one of four vessels that were blocked from entering or leaving the port after Hanjin filed for bankruptcy protection on Aug. 31 in South Korea and the U.S. on Sept.

South Korea’s troubled shipbuilder Hyundai Heavy Industries Co. announced that it has been selected as the preferred bidder for a 12-oil tanker contract worth $660 million of Russia’s Sovcomflot, reports Korea Herald. Russia’s largest state-owned shipping company Sovcomflot last month chose the South Korean shipbuilder as preferred bidder to build 12 oil tankers which will be used to carry crude oil produced in Russia to overseas. Sovocomflot will charter the fleet to Shell. Sovcomflot is a state-owned shipping company that specializes in petroleum and LNG shipping. The two firms are in talks to determine detailed terms of the agreement and plan to sign a deal within the month.

According to the Nikkei, Mitsubishi Heavy Industries Ltd. (MHI)  has entered negotiations with Imabari Shipbuilding Co., Ltd., Oshima Shipbuilding Co., Ltd. and Namura Shipbuilding Co., Ltd., each first, third, and fourth, respectively, in terms of shipbuilding tonnage, to form an alliance in the area of commercial ships. The plan of the alliance is to pool their resources in efforts to compete more effectively with their Chinese and Korean rivals, reports Korea Herald. If successful, the alliance is expected to create the second-largest tonnages, behind the world’s No.1 shipbuilder Korea's Hyundai Heavy Industries. In addition to cooperating in the areas of shipbuilding R&D and parts procurement…

To stay above water by restructuring, South Korean Shipbuilder STX Offshore & Shipbuilding Co. plans to lay off about a third of its workforce and sell a yard in France, says a report in WSJ. The country's fourth largest shipyard filed for receivership in May. The court has been supervising the firm’s rehabilitation since June. STX told a bankruptcy court in Korea that it has hired PricewaterhouseCoopers to help it sell STX France, a profitable yard in France specializing in building cruise ships. STX said it plans to cut its 2,090 staff in Korea by 35% by the end of September. The shipbuilder has been undergoing a court-led restructuring scheme, is revitalizing a plan to sell STX France by hiring a manager for its sale this week after two previous attempts failed, reports Korea Herald.

South Korea’s Hanjin Shipping is planning on submitting a self-rescue plan to creditors this week to stave off bankruptcy by Aug. 25, reports Korea Herald quoting local media. According to the shipper, the plan includes details on securing funds from its parent Hanjin Group and cutting charter fees from foreign vessel owners. According to Pulse, Hanjin Group is expected have stronger units like Korean Air help out their troubled affiliate Hanjin Shipping through new share purchase and negotiate for cut in charter fees to up to 28 percent to normalize the country’s largest cargo carrier. The group is fine-tuning a new rescue package for Hanjin Shipping to submit the plan to state-run Korea Development Bank and other creditors within this week.

Maersk and MSC have initiated meetings with Hyundai Merchant Marine (HMM) to discuss the South Korean carrier joining the 2M alliance, says local media reports. According to Korea Herald,  Korea’s second-largest shipping company is considering joining the 2M Alliance, a vessel-sharing agreement between Denmark’s Maersk Line and Switzerland’s Mediterranean Shipping Company - the world’s first and second largest container carriers. Amid growing speculation that HMM is set to join the alliance, a HMM official confirmed that discussions are ongoing with the alliance parties on June 23. The company and bigger rival, Hanjin Shipping Co., are…

Hanjin Shipping is planning to return a total of 38 chartered vessels once their contracts end as part of its restructuring efforts, reports the Korea Herald. A company official said Hanjin was planning to return 20 containerships and 18 bulk vessels by 2017, but declined to disclose details. The company was put under a creditor-led restructuring program. “We hope to save significant costs from the return. We will put our utmost efforts to stabilize the financial health at the earliest,” an official at the firm said. Of some 100 container ships that Hanjin Shipping operates, 63 are borrowed fleets. Container carriers normally borrow…

State-run Korea Development Bank and other creditors are expected to extend their conditional debt rescheduling program for Hanjin Shipping Co. to stay afloat, reports Korea Herald. This move will give the struggling shipping company enough time to cover liquidity shortage on its own. The ailing company still needs to raise about 1 trillion won ($875 million) to keep afloat. According to sources, KDB may extend the initial Aug. 4 deadline by a month  until early September. It is likely for the main creditor bank to vote for allowing more time for the shipper’s preparation, a person familiar with the situation said. It is completely up to Hanjin Group to decide but the most practical way for now is the container carrier securing the additional funds through Hanjin Group…

Cash-strapped Hanjin Shipping Co. sources say that the negotiations with tonnage providers for lower rates are undergoing, but wouldn't say much else. According to Korea Herald, the country's No.1 shipping line has come under growing pressure from its creditors to secure more money to tide over a deepening cash shortage. Hanjin Shipping has proposed raising some 400 billion won ($353 million) via stocks sales to its affiliates, but creditors want the shipping firm to jack up the figure to some 700 billion won. Meanwhile, there are reports that Korean Air, a Hanjin Group affiliate, is likely to help raise liquidity of up to 700 billion won (US$615.22 million) for ailing Hanjin Shipping. Hanjin Shipping needs some 1.2 trillion won over the next 18 months to pay back debt and do business.

The Seoul Central District Prosecutors’ Office summoned  the chief financial officer (CFO) of Daewoo Shipbuilding & Marine Engineering Co. (DSME ) today (Friday) over his alleged involvement in the financially troubled company’s accounting fraud. As per a report in Korea Herald, the Seoul prosecutors called Kim Youl-jung, 58, for questioning on allegations that he cooked the books to cover up the company's operating losses. The special investigation team said Kim is being grilled over accusations that the shipbuilder underreported some 120 billion won ($107 million) in business losses last year. The shipbuilder underreported some 120 billion won (US$107 million) in business losses last year…

South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering (DSME) is going all out to secure cash amid growing concerns over a possible liquidity crisis and a widening probe into accounting fraud, reports Korea Herald. DSME, currently under a creditor-led corporate rehab, plans to submit later this week a detailed plan to secure funds to its creditors. According to local reports, the plan may include an earlier than scheduled spinoff and initial public offering of its special-purpose ship business. DSME is also accelerating cost reductions, including job cuts. The shipbuilder had initially agreed with creditors to separate the cash cow business by 2018. DSME will now push to separate the division and make it public no later than late this year, they said.

Samsung Heavy Industries (SHI) CEO Park Dae-young proposed the outsourcing of shipbuilding to China and Indonesia in an effort to overcome a liquidity crisis, according to Yonhap. "I feel a doubt over whether we should build ships only in our shipyard," Park told a shareholders meeting which has been convened to discuss the shipyard's rights offering. Park also said the company could outsource the shipbuilding process to smaller Korean shipyard. SHI will also pursue new revenue streams as it fixes its restructuring. The company may offer project management and operating and maintenance services. Park said that such services are being considered as new business opportunities.