Financial Services Commission News

South Korea' Financial Services Commission has announced 820 billion won ($690 million)  in funding to help modernize aging passenger boats and cargo ships.According to a Yonhap, the package is meant to help smaller shipping companies build 59 new ships -- 21 passenger boats and 38 cargo vessels.The Financial Services Commission announced that shipping companies will be reimbursed for up to 60 percent of the cost of the new vessels, and South Korea's state-run Korea Ocean Business Corp. will guarantee more than 95 percent of the loans.The Korea Development Bank will also fund 20 percent of the cost needed for building a ship.According to the report…

The creditors of Daewoo Shipbuilding & Marine Engineering (DSME) still remain undecided over afor the shipyard's latest deal, further complicating troubles for one of the country's major shipyards, Yonhap reported. DSME  clinched a US$250 million deal to build three very large crude carriers (VLCCs) on April 4. Under the deal with Maran Tankers Management, a unit of Greece's largest shipper Angelicoussis Shipping Group, Daewoo Shipbuilding will deliver the 318,000-ton VLCCs by 2018. The deal came as the shipyard is suffering from a sharp decline in new orders amid a protracted industrywide slump. "We are still talking about (this), and the state-run creditors and commercial lenders have to narrow their differences on the terms," a source said, asking not to be named.

Bondholders at final meetings agree to debt-to-equity swap; shipbuilder needs about $400 mln in operating funds by April-end. South Korea's Daewoo Shipbuilding & Marine Engineering Co Ltd has won near unanimous agreement from bondholders to swap their debt for equity, meeting a condition that unlocks a $2.6 billion bank bailout for the world's biggest shipbuilder. Daewoo won approval from over 96 percent of bondholders at two meetings on Tuesday and three on Monday, with attendance exceeding 78 percent. The meetings came shortly after the shipbuilder won the approval of its biggest bondholder, the National Pension Service. "We will normalise the company as soon as possible through bone-grinding effort…

Debt-to-equity swap plan is condition of $2.6 bln bailout. South Korea's Daewoo Shipbuilding & Marine Engineering Co Ltd on Monday won near unanimous approval for a debt-to-equity swap plan in the first three of five bondholder meetings, as the world's largest shipbuilder battles to stay afloat. The votes were held hours after Daewoo's biggest bondholder, the National Pension Service (NPS), said it had agreed to the proposal. That move made it likely other bondholders would follow suit, creditor bank officials said, allowing the shipbuilder to meet conditions of a $2.6 billion bank bailout. The shipbuilder has been pushed to the brink by the impact of historically low oil prices, which caused delays in payments for complex offshore facilities.

South Korean state banks are preparing a fresh $2.6 billion bailout for floundering Daewoo Shipbuilding & Marine Engineering Co Ltd, which has built up huge losses from offshore projects and risks missing debt repayments. Daewoo, Hyundai Heavy Industries and Samsung Heavy Industries are South Korea's top shipbuilders - a massive economic force and a source of national pride. But they slipped into the red in 2015 amid a commodities downturn and bleak trade volumes, prompting cost cuts and asset sales. Of the three, Daewoo's situation is the most difficult.

The state-backed ship financing company Korea Shipping is looking to buy up to ten container vessels operated by Hyundai Merchant Marine (HMM), and lease them back to the shipping firm, says a report in Yonhap. “Korea Shipping will provide some 720 billion won  (USD 633.7 million)  to Hyundai Merchant this month or next month to shore up its capital base,” the report quoted Sohn Byung-doo, a standing member of the Financial Services Commission, the country’s financial regulator,  as saying. Funds will be transferred to HMM through the purchase of stocks and debts. About KRW150 billion will be set aside to buy HMM stock, with the remaining funds used to buy debts and convert these into stocks. Korea Shipping Co.

The chairman of South Korea's Financial Services Commission, Yim Jong-Yong, reiterated  that Daewoo Shipbuilding and Marine Engineering (DSME) would not be merged with Samsung Heavy Industries (SHI) and Hyundai Heavy Industries (HHI), according to a report in Korea Times. The Big Three companies are all under restructuring and a potential 'big deal' will harm all of them, said Yim. A precondition for a big deal is all of those companies undergo restructuring thoroughly and stand on their own. However, they are not in such a condition, he added. Yim said the FSC came to the assumption that the global shipbuilding industry will recover in 2018, thus it has to keep DSME afloat, not dissolve it or let it go bankrupt.

The former chairwoman of bankrupt Hanjin Shipping Choi Eun Young  is under investigation for alleged insider trading BBC reports qoting South Korea's Financial Supervisory Service. She has come under scrutiny after it was revealed she sold all her shares in the firm days before it filed for a debt restructuring programme in April. Ms Choi and her two daughters sold shares worth 3bn won ($2.7m, £2.1m) in April. She left the company in 2014. The sell-off saved Ms Choi and family around S$1.35 million as Hanjin continued to sink amidst the global downturn in trade, the WSJ, quoted authorities as saying. The sale prompted regulators to launch an investigation and hand the case over to a prosecutors' office.

Parent group transfers $36 mln to troubled shipper. It may cost over $150 mln to unload stranded cargo. The chairman of Hanjin Group transferred 40 billion won ($36 million) to Hanjin Shipping on Tuesday to help unload cargo stranded on the troubled shipper's vessels, a spokesman said, but regulators warned securing further funds could take "considerable time". The parent of Hanjin Shipping pledged last week to raise 100 billion won to help rescue cargo in the wake of the collapse of the world's seventh-biggest container shipper, including the 40 billion won from Chairman Cho Yang-ho. About $9 million pledged by Choi Eun-young, a former chairwoman of Hanjin Shipping, has also come in, the shipper said.

South Korea’s second-largest container line Hyundai Merchant Marine Co Ltd is in talks with South Korean firms such as home appliance makers Samsung and LG to carry their cargo, Reuters reported quoting the chairman of South Korea's Financial Services Commission.   Hanjin Shipping Co Ltd was handling cargo of Samsung Electronics Co Ltd and LG Electronics.   Hyundai plans to deploy 13 more vessels to the U.S. and Europe to help ease cargo disruptions after its bigger rival Hanjin's collapse, according to a report in Bloomberg.   HMM could acquire some of the distressed assets from Hanjin, including vessels and protecting some jobs, Bloomberg has reported. HMM said it would work with authorities to come up with possible measures, but elaborated no further.

As most of  Hanjin Shipping Co's assets are stranded at sea or in ports world-wide, the the South Korean company is seeking to protect assets world-wide. Hanjin Shipping’s government-backed creditors are ready to provide the collapsed carrier with roughly 100 billion won ($90.60 million) of loans if Hanjin’s parent provides collateral, Fortune reports South Korean government officials as saying. Hanjin's collapse has left much of its fleet stranded at sea, unable to dock over fears that vessels be seized by creditors. According to BBC Seoul could give 100bn won ($91m; £68m) or more in long-term funding at low interest rates if Hanjin provided the necessary collateral.

Korean Hanjin Shipping's filing for receivership reflects an unsustainable supply-demand imbalance in container shipping, Fitch Ratings says. "We expect more defaults and M&A activity in the short and medium term but these will only restore equilibrium and boost freight rates if they prompt capacity reduction," says Fitch. Bankruptcies in shipping are not unusual, especially in the current dire industry conditions, but Hanjin is the seventh largest container shipping company in the world and its filing for receivership may therefore have far-reaching ramifications. In particular, creditors' withdrawal of support may indicate a re-assessment of the financing landscape, where secured bank funding for new vessels has remained relatively accessible even as market conditions have deteriorated.

South Korea's financial regulator said on Wednesday that Hyundai Merchant Marine Co Ltd will seek to acquire healthy assets of troubled shipper Hanjin Shipping Co Ltd. The Financial Services Commission said in a statement that Hanjin will soon file for court receivership but that the impact from the filing on domestic financial markets will be limited. A Hyundai Merchant Marines spokesman told Reuters nothing has been decided on any potential acquisition of Hanjin assets and that the firm will be in talks with Hanjin lead creditor Korea Development Bank concerning future plans. Reporting by Joyce Lee and Changho Lee

Hanjin says asks court for its assets to be frozen; Hyundai Merchant looking to buy Hanjin's "good" assets. South Korea's Hanjin Shipping Co Ltd filed for court receivership on Wednesday after losing the support of its banks, setting the stage for its assets to be frozen as ports from China to Spain denied access to its vessels. Banks led by state-run Korea Development Bank (KDB) withdrew backing for the world's seventh-largest container carrier on Tuesday, saying a funding plan by its parent group was inadequate to tackle debt that stood at 5.6 trillion won ($5 billion) at the end of 2015. Hanjin Shipping, South Korea's biggest shipping firm…

According to a July 30 report from the JoongAng Daily, with the scheduled adoption of the International Financial Reporting Standards (IFRS) shipbuilders were expected to see higher debt ratios. However, the Financial Services Commission and Financial Supervisory Service said that the International Accounting Standards Board (ISAB), the London-based group that supervises the IFRS, had accepted in principle a request by Korean financial authorities to allow a fair value hedge accounting system in the case of the shipbuilders. A fair value hedge system would allow shipbuilders to declare an intermediate payment in their financial accounts for contracts they received. (Source: JoongAng Daily)

The South Korean government will create a US$1.2 billion ship investment fund to aid the shipping industry which has been struggling due to decreasing global trade. A report by South Korea's Yonhap News Agency said the fund will help shippers buy and sell vessels with less financial risk. The fund, aims to "aid the shipping industry which has been struggling due to decreasing global trade". Fund will "help shippers buy and sell vessels with less financial risk as the Korea Trade Insurance Corp. and the Korea Maritime Guarantee Insurance Co. Local financial companies and state-run policy lenders including the Korea Development Bank will participate in the $1.2 billion fund.

A report in WSJ says that Hanjin Shipping Co has applied for a creditor-led debt restructuring to avoid bankruptcy, reviving talk of a possible merger with rival Hyundai Merchant Marine Co. (HMM). It could be merged as a part of the government-led restructuring of ailing industries and companies, according to government sources. Both Hanjin Shipping Co. and Hyundai Merchant Marine Co. (HMM) are in hot water, but they are different from each other in a debt structure. Unlike HMM, Hanjin Shipping has a lot of non-bank debt, which makes it difficult for the main creditor Korea Development Bank (KDB) and other creditor banks to manage the company under a creditor-led restructuring program.

The restructuring issue of Samsung Heavy Industries (SHI) will spread to the entire Samsung Group as its main creditor Korea Development Bank(KDB)  and the financial authorities are putting pressure on the group, reports Business Korea. SHI has submitted its self-rescue plan to its main creditor, the state-run KDB, the Korea Herald reports citing a company official as saying on Tuesday. The plan, aimed at restoring the company’s liquidity, reportedly includes up to 1,500 job cuts, selling of KRW 200 billion worth (USD 169 million) of real estate assets and disposing of stakes in Doosan Engine. SHI’s move is in line with the three-track plan revealed by the country’s financial regulator…

An official at the Financial Services Commission (FSC), South Korea's financial regulator, is quoted by Xinhua as stating that the government plans to order a feasibility study by research institutes on the feasibility of setting up a shipping guarantee fund, with the report due for consideration in the first half of next year. Similar types of funds for shippers have already been established in some European countries such as Germany and Denmark, the official indicated, noting that the funds would serve as a guarantor for loans to shipping companies.

The Korean government has said that  it will consider merging ailing Hyundai Merchant Marine (HMM) and Hanjin Shipping should they successfully normalize their management, according to The Korea Times. "Once the normalization program for the two shipping companies is wrapped up, the government will consider various plans including the merger of the companies," said Financial Services Commission (FSC) Chairman Yim Jong-yong. He said, “The possibility of the merger is not so different from the direction of our restructuring plans for shipping companies revealed earlier. The two companies should normalize their business first by readjusting charter fees, adjusting debts with bondholders, adjusting debts with creditors and joining a shipping alliance.

South Korea is getting serious about tackling its "zombie company" problem and will set up its first restructuring firm backed by the government and banks in November, spooked by some huge corporate losses and a darkening economic outlook. Korea Development Bank (KDB) will also seek to sell some of the 118 non-financial firms it controls, the government said last week - a move seen as part of its new resolve to deal with the issue. About 20 companies controlled by the state-run bank are seen as struggling.

South Korea’s government is discussing whether to merge or sell  Hanjin Shipping and Hyundai Merchant Marine in an attempt at state-led industrial restructuring. But the two lines in question belong to different container alliances, are fierce rivals and have both denied that Seoul is trying to coerce them to merge. “There is a need to maintain the existence of the two companies when considering the impact a merger could have on South Korea’s import- and export-oriented economy and global shipping alliances, as well as the transhipment competiveness of Busan port,” the Ministry of Oceans and Fisheries said in its rebuttal of the argument.

Acquiring ships from financially troubled shipping companies will remain one of the mainstay jobs handled by South Korean finance house Korea Asset Management Corporation (KAMCO) next year, reports Korea Times. The company has bought 33.3 billion won worth of assets from two SMEs in the January-October period and plans to acquire assets valued at 40 billion won from two to three SMEs by December, a move to give relief to financially troubled companies, KAMCO Chairman Hong said in a press conference on Dec. After consulting with the Financial Services Commission (FSC), KAMCO has earmarked 100 billion won in its budget this year for acquisition of properties or other assets held by debt-laden SMEs in order to help them stay afloat, the state company said.