Hanjin Shipping will need KRW1.2trn won ($1bn) to keep going for the next two years, according to a report written by Samil PricewaterhouseCoopers (PwC).
Hanjin Shipping reckons it will suffer a cash shortage of about KRW1trn by the end of this year unless a voluntary agreement is signed with creditors.
The Cho family, which runs Hanjin Shipping, could be stripped of their control of the line unless they make a significant financial contribution towards its restructuring, government officials in Seoul have warned.
The government has made clear it will not sanction state-run Korea Development Bank to hand out further bailout cash until the Cho family chip in some of their own cash.
“The major shareholders must share the responsibilities and burden to save a company in trouble fairly with creditors and employees. Personal donation or written pledge to give up the company can be the way,” Financial Services Commission (FSS) chairman Yim Jong-yong said earlier this week.
Cho Yang-ho is chairman of parent Hanjin Group as well as chair of Korea Air Lines. His two daughters and son also have shareholdings in the parent group.
Hanjin Shipping said last Friday it would seek creditor-backed restructuring. Creditors have demanded that Hanjin negotiates for lower charter fees among its chartered in fleet, something they have also made Hyundai Merchant Marine (HMM), another endangered Korean line, do. At HMM, Hyun Jeong-eun, the chairman of the parent Hyundai Group, donated KRW30bn ($26m) as well as giving up her voting rights at the shipping line last month, something her counterparts, the Cho family, at Hanjin will now have to study.
Were KDB to become the largest shareholder in both lines – as is deemed likely under mooted restructuring plans – then the merger of the pair would seem likely, something both HMM and Hanjin have denied in recent months. However, with container alliances coming up for huge changes early next year, increasingly it looks like container carriers need size and significant market share in order to get to the negotiating tables of the new container alliances that will emerge in 2017.
