Ailing Hanjin Shipping has come under growing pressure from its creditors to secure more money from its parent Hanjin Group to handle a rising cash shortage. Hanjin Group and Chairman Cho Yang-ho has proposed raising some 400 billion won (US$354.61 million) via stocks sales to its affiliates, but creditors want 700 billion to 900 billion won (US$620.57 million to 797.87 million).
According to the creditors on July 27, Hanjin Shipping needs 1 trillion to 1.2 trillion won (US$886.52 million to 1.06 billion) over the next 18 months to pay back debt and do business. The creditors believe that Hanjin Shipping would be able to raise 300 billion won (US$265.96 million) if it succeeds in cutting charter rates and postponing debt repayments. On this basis, the creditors urge Hanjin Group and Chairman Cho to jack up the figure to 700 billion to 90 billion won (US$620.57 million to 797.87 million).
There are also conciliatory measures. First, the creditors plan to extend the creditor-led restructuring scheme, which grants a three-month suspension on all payments of principal and interest, by one month from the expiry date of August 4 to September 4. An official from the creditors said, “Creditor banks have agreed to extend the debt restructuring program if Hanjin Shipping requests it.” Second, the creditors are considering allowing Chairman Cho to retain the management rights of Hanjin Shipping as he does now if group affiliates pitch in with cash assistance to the shipper. It is more sure way to secure the management rights than the right of first refusal for stock sales which were considered earlier.
When the creditors convert the shipper’s debt into equity, a 33.23 percent stake owned by its major shareholder Korean Air will be lowered than 3 percent through a large-scale reduction of its capital. Aside from this, however, the creditors will enable the airliner to maintain its position as the major shareholder by securing new shares when Chairman Cho or Hanjin Group increase its capital by 700 billion to 90 billion won (US$620.57 million to 797.87 million). To be sure, this is possible only when Chairman Cho provides enough funds.
However, Chairman Cho and Hanjin Group say that the group-wide maximum financing capability stand at 400 billion won (US$354.61 million). The group claims that even its other affiliates, including Korean Air, can face cash shortage if it raises more funds than that. In particular, Hanjin Group expects that it can raise more than 700 billion won (US$620.57 million) from the readjustment of charter fees and debt repayments, showing a huge gap with the creditors’ view of 300 billion won (US$265.96 million).
The Original Posted by Jung Min-hee/Business Korea