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Hanjin and HMM told to reduce debts if they want to access state funds

Korean authorities will turn the taps off leading lines until they bring their extraordinary debts under control.

The Financial Services Commission (FSC), the republic’s financial regulator said Wednesday it will announce a set of ill-performing companies in July based on the results of a credit risk analysis on businesses that owe more than KRW50bn ($41m) to banks.

“With the global economy not showing signs of recovery, we will make a stronger push in corporate restructuring this year by adopting stricter standards to sort out more poor-performing companies compared with last year,” Kim Yong-beom, secretary general of the FSC, said in a press briefing.

The Korean state has formed a $1.2bn fund to help out local yards and lines, whereby shipyards will build vessels using the fund cash which will then go on long term charter to local lines. However, access to this capital can only be given to those who fall within the state’s new debt guidelines.

“Only when shipping companies, such as Hanjin Shipping and Hyundai Merchant Marine, meet the requirement of lowering their debt-to-equity ratio to below 400% from the current 600-800%, they can charter the vessels,” said Ryu Jae-hun, director of the FSS corporate restructuring division.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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