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K Line dismisses bankruptcy speculation

Representatives at Japanese shipping major Kawasaki Kisen Kaisha (K Line) have rubbished reports from China that the line will shortly follow Hanjin Shipping into administration.

A report carried by Shanghai Metals suggested K Line will file for bankruptcy protection within the next two weeks.

Kiyoshi Tokonami, general manager of K Line’s IR & PR Group, dismissed the report today. Speaking from K Line’s HQ, Tokonami told Splash rumours of them filing bankruptcy are “untrue, completely groundless”.

Adding further fuel to the bankruptcy speculation, Splash has received an image (pictured below) purportedly to be an emergency notice from a Chinese shipper that states K Line will follow Hanjin into court receivership either next week or within two weeks.

In May, ratings agency Moody’s downgraded K Line from Ba2 to Ba3. As of the end of its last financial year, March 31 2016, its gearing ratio stood at 1.48:1.

K Line, also in the red in the first quarter, warned at the end of July its full year loss will be worse than originally forecast. K Line is now bracing for a full year loss of Y45.5bn, some Y10.5bn worse than originally predicted in April, the start of the Japanese financial year.

Japanese shipping has been rocked by big bankruptcies in recent years – Sanko Steamship and Daiichi Chuo being the two most high profile. A K Line receivership, however, would be on a whole different scale given its scale and diverse business activities.

Earlier this month Splash reported that a Japanese fund run out of Singapore called Effissimo was gearing up to take over K Line.

Effissimo has been steadily building its stake in Japan’s third largest line to the point whereby it is now the largest shareholder with a 37% holding as of early August, up from 6.2% a year earlier.

Effissimo Capital Management, established in Singapore by ex-colleagues of activist investor Yoshiaki Murakami, has become the top shareholder in the line as well as in other well known Japanese brands such as office equipment maker Ricoh. Its strategy has been to target Japanese firms it deems undervalued.

However, K Line’s Tokonami today dismissed the takeover talk. “We are having dialogue, explaining our business plans as is usual with any shareholder,” Tokonami said, adding: “Effisimo says their stake is purely for investment purposes.”

K Line shares are trading today at JPY263, up by 2.7%.

kline-image

With additional reporting by Grant Rowles.

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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.

Comments

  1. Well that is one of them, K-Lines of the Twelfth, (12) Global Shipping Giant, That are in financial trouble, Rickmers is another, Hyundai Merchant Marine, is another, CMA/CGM is not far.. Global container leaders are floundering under their own creations, and the banks did nothing to stop this…Five, (5) ago I said the other shoe has not fallen yet, but now it is, In This global economic depression, that all started in 2007 & is just about to end sooner then later. Merry Christmas, & Interesting of New Year! love it.

  2. This news is not good, even if the rumors aren’t true this is going to spook many companies away from booking on K-LINE regardless of how many emails they send around reassuring everything is going according to the status quo.

    Nobody wants another Hanjin/STX.

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