Hanjin Shipping Seeks Bank-Debt Restructuring

Maritime Activity Reports, Inc.

April 22, 2016

Hanjin's debts at 5.6 trln won at end 2015; company has been squeezed by low shipping margins.

South Korea's Hanjin Shipping Co Ltd will ask creditor banks to restructure its debt, the country's largest shipper by assets said, in an attempt to weather a squeeze in margins from a severe industry downturn.

Hanjin, whose chairman Cho Yang-ho also controls flag carrier Korean Air Lines Co Ltd, had debt of 5.6 trillion won ($4.9 billion) and a debt-to-equity ratio of nearly 850 percent as at the end of 2015, according to the company.

While major global shippers have undertaken merger deals and entered new alliances recently to survive the downturn, Hanjin and Korea's No. 2 shipper Hyundai Merchant Marine Co Ltd , which is also under voluntary debt restructuring, haven't taken that route yet.

The current shipping alliance that Hanjin is part of, called CKYHE, expires at end-2016 and has seen two high-volume members commit to a new partnership earlier this week.

Recent high-profile mergers and acquisitions in shipping include the creation of China COSCO Shipping through a state-led merger, and CMA CGM's deal to acquire Singapore's Neptune Orient Lines (NOL).

Shares in Hanjin Shipping closed down 7.3 percent at a record low of 2,605 won on Friday, valuing the company at about 638.9 billion won, while the benchmark index fell 0.3 percent. ($1 = 1,143.4800 won) (Reporting by Joyce Lee

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