During several rounds of emergency meetings held during the Chuseok holiday, Korean Air’s executive board failed to reach an agreement to find $60 billion won for the cash-strapped firm.
“Since there are multiple stakeholders, holding the terminal collateral is nearly impossible. New measures are under discussion,” a source familiar with the matter was quoted by Yonhap News Agency as saying.
Amid growing public pressure for the parent group to cover the overdue balance and ease the freight transportation issue, Hanjin Group Chairman Cho Yang-ho vowed earlier this month to inject 100 billion won.
Of the 100 billion won, 40 billion won came from Cho’s private assets. The remaining 60 billion won was to come in the form of loans secured by the shipping unit’s stakes of Hanjin Long Beach. But the plan appears to have floundered due to opposition from Korean Air’s board members.
The board initially made an agreement on Sept. 10 to draw up 60 billion won with loans secured by the terminal collateral. But they reversed the plan after some board members raised questions that it could be subject to breach of trust and also that the nature of the plan is unrealistic.
Some pointed out that the plan is not feasible when looking at shareholder structure.
Holding the terminal as collateral requires approval from another shareholder, MSC, which owns 46 percent of the terminal’s shares, as well as six foreign financial institutions from which Hanjin has already taken out collateral loans.
Hanjin Shipping had asked for approval to secure the terminal, but the financial institutions reportedly did not respond to the request.
The board also discussed injecting the funds first to the shipping company and acquiring the security later. But some board members reportedly opposed to the plan saying that it is subject to malpractice.
Korean Air holding other assets as collateral seems to be difficult, as the airline reportedly has nearly no useful assets, except for the terminal, industry insiders said.
Hanjin Shipping is in need of 170 billion won to cover overdue balance and resolve delays in cargo.
Last week, Cho injected 40 billion won from his personal asset to the ailing shipper. His sister-in-law and the former Hanjin Shipping Chairwoman Choi Eun-young also presented 10 billion won from her own pocket in the face of the angry public holding her responsible for the Hanjin crisis.
Meanwhile, 54 Hanjin vessels have had their operations disrupted overseas. With stay orders granted in several countries, unloading work has resumed in Japan, following the US and Spain.
By Lee Hyun-jeong (email@example.com)