This is the week where Hanjin Shipping will find out if it has done enough to avoid court receivership with creditors set to decide on the future of South Korea’s largest line by Sunday at the latest.
The Korea Shipowners’ Association (KSA) has weighed in on the matter, warning that a possible court receivership, could lead to huge layoffs and a multi-trillion hit to the Korean economy.
The association estimated that placing Hanjin Shipping into court-led restructuring could cause some KRW9.24trn ($8.31bn) in damages and around 1,193 employees working in the industry could lose their jobs.
The amount could rise to KRW17trn and 2,300 jobs when losses in the port and trade industries are included, it said.
“Hanjin Shipping is an independent company, but it is also the backbone of international trade, which export-driven South Korea relies on heavily,” said Cho Bong-ki, a senior official at KSA.
Over the weekend Hanjin Shipping announced major progress in negotiations with tonnage providers and lenders. Crucially, Seaspan has agreed to slash charter rates to the embattled Korean line. The Gerry Wang-led firm had been resolute up until now in not cutting charter rates, a key hurdle demanded by Hanjin’s creditors.
Moreover, foreign banks such as Credit Agricole said they will consent to a delay in the repayment of loans.
“With the charter rate cut talks completed, it could have the effect of saving some KRW800bn ($718m) in cash, and we will have the effect of raising a total of KRW1.27trn when a delay in loan repayments is considered,” Hanjin Shipping said in a statement on Sunday.
Compatriot shipping line Hyundai Merchant Marine (HMM) managed to avoid court receivership earlier this year.
