US Bans Imports From Chinese Fishing Company Citing Seafarer Welfare
By David Lawder (Reuters) – U.S. Customs and Border Protection on Friday imposed a new import ban on seafood from a Chinese fishing fleet that the agency says is using...
By Hooyeon Kim and Kyunghee Park
(Bloomberg) — State-owned Korea Development Bank, the main lender to the troubled Hanjin Shipping Co., said it would “actively support” any efforts by Hyundai Merchant Marine Co. should it decide to purchase some of its bigger rival’s assets.
Hyundai Merchant, whose biggest shareholder is KDB, could consider taking over some of Hanjin’s vessels, workers and other holdings if that helps it remain competitive, Baek In Gyun, a Seoul-based general manager at the bank said in an interview. A decision may not be coming soon as a court is still hearing Hanjin’s application for bankruptcy protection, he said.
“We would consider taking over any viable assets, if there are any,” Baek said in Seoul. “If there are any parts of Hanjin Shipping that would help Hyundai Merchant’s operations, we will not spare any efforts.”
The Hanjin impasse is awaiting resolution as creditors, lawmakers, owners and a court consider all options to avert wider repercussions on an industry that helps move more than 90 percent of South Korea’s exports. Lobby groups and workers’ unions have warned that a failure to rescue the distressed company may put as many as 11,000 jobs at risk in the shipping hub of Busan and many businesses may be forced to shut down.
Besides the impact on the local economy, troubles at the firm that controlled 2.9 percent of global container shipping market has also thrown the global supply chain haywire, with cargo stuck on many Hanjin ships around the world and more piling up at yards, waiting for alternative ways.
“The problem here is that it’s taking too long to figure out what’s going to happen to Hanjin Shipping,” said Kim Tae Il, a research analyst at the Korea Maritime Institute in Busan. “In the meantime, we are in the midst of this disruption and every party involved aren’t actively stepping in to find a solution.”
The board of Korean Air Lines Co., the biggest shareholder of Hanjin Shipping, will meet again Saturday to decide on injecting 60 billion won ($55 million) after dithering at two earlier meetings. Chairman Cho Yang Ho of the Hanjin Group, which controls Korean Air, has pledged 40 billion won. At the same time, South Korea’s ruling Saenuri Party asked the government to offer about 100 billion won in low-interest loans, provided the owners provide collateral.
If Hyundai Merchant were to buy all of Hanjin’s 141 ships, including 97 container movers, it could become the world’s fifth-biggest and Asia’s second-biggest container line with a market share of 5 percent, according to Alphaliner. Hyundai Merchant had 120 vessels in its fleet at the end of August, including 63 container vessels.
Hyundai Merchant has been making losses in four of the last five years as overcapacity led to a slump in shipping rates. The company was able to agree to adjust charter rates on vessels it leased from shipowners and extended maturity of bonds with investors, winning financial support from its creditors. KDB is now its biggest shareholder, with a stake of about 14 percent.
The South Korean government has formed a task force to monitor the supply-chain disruption to enable it to take appropriate steps when needed.
The Seoul Central District Court, after accepting Hanjin Shipping’s receivership filing on Sept. 1, assigned the company’s Chief Executive Officer Seok Tae Soo as manager and asked him to submit a revival plan by Nov. 25.
Korea Development Bank has been at the forefront of restructuring industries, especially after the 1997-98 Asian financial crisis, to help indebted companies to turnaround. The state-owned lender took over companies such as Kia Motors Corp. and Daewoo Shipbuilding & Marine Engineering Co.
“The financial system can’t save everyone,” Baek said. “But if there’s anything we can do to smooth things, we will do.”
© 2016 Bloomberg L.P
Join the 69,732 members that receive our newsletter.
Have a news tip? Let us know.