"We have to see whether (Hyundai Merchant) will go to court receivership," Finance Minister Yoo Il-ho told reporters after a meeting. "The talks are still going on, but there is no change in our stance (court receivership)."

The country's No. 2 shipper has been under severe financial strain in the face of falling freight rates amid a protracted slump in the world's economy. Since February, Hyundai Merchant has been in talks with shipowners to cut the rates.

The shipper's creditors offered to swap their loans worth 700 billion won ($588 million) into its stocks as part of its debt recast efforts, which many believe will help the owners of chartered ships back the proposed rate cut.

But the shipowners are known to be reluctant to slash the rates on concerns that other shippers would make a similar demand and their investors and shareholders could oppose it.

Financial authorities and the government believe that Hyundai Merchant and its bigger local rival Hanjin Shipping are under contract to pay charter fees four to five times higher than the current rates by 2026. In the shipping industry, freight charges have dropped more than 25 percent from the end of last year, further hurting the profit of shipping lines.

Korea's two largest container carriers posted massive losses in the first quarter, hard hit by plummeting freight rates.

Hyundai Merchant, meanwhile, canceled a conference call scheduled later in the day to discuss the details of the charter rate cut with all shipowners. (Yonhap)