SEOUL, May 4 (Yonhap) — Creditors of Hanjin Shipping accepted the troubled shipping giant’s debt restructuring plan Wednesday, also granting a three-month suspension on all payments of principal and interest.
The decision, however, will only be effective as long as all of the company’s other business partners, including private lenders and owners of ships chartered by Hanjin, also remain committed to the self-rescue plan.
“The creditors decided to start the process of joint debt-restructuring as requested by Hanjin Shipping on April 25,” they said in a statement released by the state-run Korea Development Bank, the main creditor of Hanjin.
“The debt-restructuring process is a plan based on the condition that all parties with an interest (charter ship owners and private moneylenders) take part in the process and maintain their alliance, and the self-rescue plan will be terminated should any of these conditions not be met,” it added.
The task of persuading such other parties to join and support the process apparently falls on the shipping company itself, as the creditors had previously demanded the company renegotiate its terms of charter with ship owners, citing what the government has also called excessively and unnecessarily high costs.
The government earlier pointed out that South Korean shipping companies were paying as much as five times higher than the market average for their chartered ships.
Under the joint debt-restructuring plan, Hanjin Shipping will be given a three-month grace period on its payment of interest and principal on loans from three main creditors that include Nonghyup Bank and Woori Bank. The suspension of payment may be extended by an extra month.
A supervising agency will be named to oversee the process, the creditors said.
Hanjin Group, the parent company of Hanjin Shipping, and its chairman Cho Yang-ho have agreed to give up their managerial control of the shipping unit under the self-rescue plan.
In 2015, Hanjin Shipping posted a net profit of 3 billion won (US$2.6 million), a turnaround from a net 423.3 billion won loss in the previous year.
The company has to pay off or refinance some 500 billion won worth of debt that will mature before the end of June. The company-proposed plan includes raising some 400 billion won selling its assets.
As of end-2015, the company’s total debt reached 5.6 trillion won.
Source: Yonhap News Agency
Source: Yonhap News Agency