Hanjin May Seek Charter Rate Reductions
Hanjin Shipping has written to foreign owners of its chartered-in vessels suggesting that it may need their assistance during the line's restructuring efforts.
"Our management has come to the conclusion that our own efforts alone may fall short of fully resolving the liquidity issues that we are facing," the firm said in a letter to shipowners.
Drewry suggests that if Hanjin (or other carriers) should move to pressure its shipowners to reduce rates or exchange revenue for equity, it could present the owners with a difficult choice. “Shipowners would much prefer not to become part-owners in failing carriers, but the alternative in the current weak market is that they have no business at all for their assets, or at the very best at much reduced rates,”
On Friday, Hanjin submitted a request to Korea Development Bank for a debt restructuring plan, and KDB has said that it will announce a decision Wednesday on whether it would provide assistance or to effectively put Hanjin into court receivership. PricewaterhouseCoopers has estimated that Hanjin will need in the range of $1 billion to continue operations over the next two years.
South Korea's financial regulators and state development banks have suggested that significant chartering cost cuts are an essential component of restructuring plans for Hanjin and its compatriot Hyundai Merchant Marine. Hanjin presently pays roughly $1 billion a year for its 90 chartered-in vessels.
In related news, Reuters reports that Cho Yang-ho, the chairman of South Korean conglomerate Hanjin Group, has resigned as head of the 2018 Pyeongchang Winter Olympics organizing committee (POCOG) in order to focus on his troubled Hanjin Shipping business.
With Hanjin Shipping, South Korea's largest shipper by assets, facing severe financial difficulties, Cho needed to focus his efforts on restructuring and stabilizing the company, POCOG said in a statement.
Cho's departure leaves organizers scrambling to find a replacement just 646 days before the start of Asia's first Winter Olympics outside of Japan.
"For the past two years, I have truly put forward my very best efforts to work with every member of the organizing committee to prepare a successful Olympic and Paralympic Winter Games in 2018," he said. "I give my assurances that I will continue to support Pyeongchang through to the Games in 2018."