A New Jersey judge approved the sale of Hanjin Shipping’s stake in the Port of Long Beach’s largest terminal Wednesday, ending months of uncertainty at a port still reeling from the giant shipping company’s financial failure.
Hanjin filed for bankruptcy on Aug. 31 triggering chaos along the global supply chain and nearly halting business at Long Beach’s most active terminal. Since then, cargo volume at the nation’s second busiest port has fallen sharply.
The agreement approved Wednesday will allow the local container terminal to operate through 2027, when the lease expires, according to Lori Ann Guzman, president of Long Beach’s Harbor Commission, which governs the port.
The agreement “will help the industry. It will help this company and it will help individual workers,” Guzman said.
Hanjin, once the seventh-largest shipping company in the world, will sell its 54 percent stake in the terminal, run by Total Terminals International LLC, for $78 million. Switzerland-based Mediterranean Shipping Company and its subsidiary Terminal Investment Limited will take over the terminal.
Calling the purchase “a good deal,” U.S. bankruptcy Judge John K. Sherwood said in making the decisions, he considered what would happen if he didn’t act swiftly to unload the South Korean company’s asset.
TTI, which operates Pier T at the Port of Long Beach and Terminal 46 at the Port of Seattle, was flirting with financial ruin after revenue from Hanjin’s cargo ships dried up.
He said if the decision was pushed back too far, TTI would wind up in bankruptcy proceedings and its value would be wiped out.
“By not approving this deal,” he said in court, “we all the run the risk that there is no money from Hanjin from this transaction.”
Companies that leased container cargo to Hanjin and companies that insured the former shipping giant tried to block the sale and keep its assets in the United States. They argued the agreement was too rushed, and the price too low.
In the end, Sherwood disagreed. He said if proceedings were further delayed, TTI could fall into bankruptcy and the sale could get tied up in court proceedings.
He noted another suitor for the port, an equity company that eventually backed out, brought no guarantee that it could lure in the container ship traffic that sustains ports.
Long Beach port officials are banking their hopes on MSC, the world’s second largest shipping company, and its alliance with other shippers worldwide. They hope the company will drive up traffic along docks.
The lease for Pier T brings in a minimum of $83.5 million a year for Long Beach’s port.
“We want it to remain one of our biggest assets,” Guzman said.
Source: Press-Telegram (LF)
Source: Press-Telegram