Hanjin Files For Bankruptcy Protection

WASHINGTON - Sep 11/16 - SNS -- Hanjin Shipping, the largest shipping company in Korea and seventh largest in the world, filed for court receivership on August 31, 2016.

Reporting on this event, the U.S. agricultural attache for the country said some importers have had to supply additional collateral to get perishable Hanjin shipped cargo released. As a result, exporters are "encouraged to ensure that their brokers and shippers are arranging alternative transportation methods. We anticipate that these shipping difficulties will moderate as additional capacity comes online and as the Korean shipping industry gains a better handle on Hanjin's situation.

Hanjin Shipping has outstanding loans of roughly US$ 1.1 billion that are set to mature next year. Of them, $590 million is required to aid them immediately this year. Hanjin Shipping's parent Group, Hanjin Group, said that they can only offer $180 million this year and another $270 million by next July through a capital increase by issuing new shares.

Hanjin Group asked creditors to finance the shortage of oncoming debt payments. Creditors, however, rejected the offer. They are demanding Hanjin Group shoulder a greater burden in order for creditors to also take risks of extending more loans to the shipper.

Hanjin Shipping, with 99 container vessels, 11 terminals, 23 foreign corporate bodies and over 100

overseas business branches, is expected to be put up for sale. After the decision, the Korean government said that it will seek ways for Hyundai Merchant Marine to take over some of Hanjin Shipping's profitable assets, including vessels, network and key personnel.

The shipping industry in Korea sees this deal as a de facto merger by Hyundai. Hyundai Merchant Marine, the second largest shipping company in Korea has decided to mobilize 13 substitute vessels but it will not be enough to cover the full amount of freight that Hanjin Shipping has been handling.

Hyundai will begin to operate 4 container vessels on the U.S. route (Gwangyang port – Busan Port – Los Angeles). Each container vessel (with a capacity of 4,000 TEU) will depart for the United States on a weekly basis to fill in the gap caused by the absence of Hanjin, which is reported to have been handling 7% of sea container shipping between Korea and the U.S. Hanjin is known to have been handling 25,000 TEU on a daily basis.