Hanjin Shipping Co., South Korea’s largest container carrier suffering from debt woes, is mulling ways to extend the deadline to meet all obligations to receive debt relief from creditors by another month, according to multiple sources from the financial industry and Hanjin Shipping on Tuesday.
The move comes as the carrier judged that it would be impossible for it to reschedule and restructure debts in due course before the Aug. 4 deadline set by creditors to receive relief and avoid court receivership.
In early May, creditors accepted Hanjin Shipping’s voluntary workout proposal on condition that it reduces chartering fees and reschedules debt with creditors and bondholders. Ever since, Hanjin Shipping has been able to roll over its debt twice through meetings with bondholders, but it still has more than 1 trillion won ($872 million) worth of loans to pay back that mature next year. For the shipper to push back the maturity for loans, it needs consent from its bondholders.
An unnamed official from Hanjin Shipping, however, said the company has no enough time to arrange another bondholders meeting before the initial debt relief deadline set by creditors, and it is still negotiating terms – like the amount of debts to be rescheduled or the terms of the debt agreements – with creditors.
For Hanjin Shipping to open a bondholders meeting, it needs to give bondholders notification at least three weeks in advance, meaning that it needs to set out a schedule no later than July 14. If it passes over this date, the shipper would not be able to open a meeting in time before the Aug. 4 deadline.
An unnamed creditor official said there still is time, and creditors will likely consider an extension if Hanjin Shipping officially request for an extension.
Through its own restructuring plan, Hanjin Shipping plans to raise 411.2 billion won, but as it needs 1.2 trillion won worth of funds to pay back loans by next year, creditors believe the company’s proposed plan is not sufficient enough to manage operations. Last month, parent company Hanjin Group pledged 400 billion won worth of financial support to salvage the shipping unit, but creditors rejected the offer.
Apart from its own restructuring plans, Hanjin Shipping has put out all efforts to raise funds by selling assets. Recently, it transferred its operating rights of eight shipping routes in Asia to Hanjin Transportation Co. for 62.1 billion won. It also plans to sell its stake in three logistics entities in China including Qingdao.
The Original Posted By Yoon Jin-ho/Maeil Business News Korea