[THE INVESTOR] Korean Air, the largest shareholder of Hanjin Group, appears to be seeking alternative plans to save near-bankrupt Hanjin Shipping in the face of the board‘s rejection of injecting $60 billion won ($53.7 million) in the ailing shipper.
During several rounds of marathon meetings held during the Chuseok holidays, 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,” said sources from the airliner.
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 was to come from Cho’s private assets and 60 billion won was to come in the form of loans secured by the shipping unit’s stakes of Hanjin Long Beach.
Korean Air’s executive board made an agreement on Sept. 10 to draw up 60 billion with loans secured by the terminal collateral, but they reversed the plan after board members raised questions that it could be subject to breach of trust and lack of practicability.
Some pointed out that the plan is not feasible, as holding the terminal 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 responses reportedly have not been made so far from the financial institutions.
The board also discussed injecting the funds first to the shipping company and acquiring the security later, but some board members reportedly expressed concerns that such a measure for the company under court receivership could cause breach of trust controversy.
Uncertainty persists as holding other assets as collateral is also not likely. There are reportedly nearly no assets for Korean Air to use for security except for the terminal, industry insiders said.
About 170 billion won is projected to be needed to cover the overdue balance and solve the cargo transportation problem, with 50 billion won expected to be shouldered by private assets from Cho and former Hanjin Shipping Chairwoman Choi Eun-young.
The board will resume meeting soon to discuss the funding plan, Korean Air said.
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/The Korea Herald ()
