HHIC Seals Deal with Creditors
Cash-strapped South Korean shipbuilder Hanjin Heavy Industries & Construction (HHIC) has signed a memorandum of understanding (MOU) with its creditors to receive a KRW 120bn ($103m) cash injection, and will sell off property and businesses worth KRW 2tr ($1.71bn) as part of its self-restructuring plans.
The shipbuilder entered workout program with nine creditor institutions led by its main creditor Korea Development Bank (KDB), four months after it applied for the procedure to seek debt relief and bailout.
HHIC filed a request to restructure its debt with its creditors in January, having been faced with liquidity shortage.
"Under the deal, valid until 2018, the company will receive KRW 120 billion of new funding from its nine creditors. HHIC has agreed to in turn sell its non-core assets, such as energy units Daeryun Power Co. and Byeollae Energy Co., cashing in expected total of KRW 2 trillion," says sources.
In addition, creditors agreed to a refund guarantee for Subic Shipyard in the Philippines if the shipbuilder fails to deliver a ship on time.
The creditors have previously approved an emergency financial boost of USD 109 million to Hanjin Heavy in January this year.
Hanjin’s lenders easily agreed to the company’s request as it does not have offshore ventures that posed as the biggest burden for other shipbuilders and its debt structure is less complex since its borrowings are mostly from banks.
The agreement with creditors was already expected as the shipbuilder was not hit by the ordering slump in the offshore oil and gas industry as is the case with its counterparts DSME, HHIC and SHI.
