As the days of Hanjin Shipping seem numbered, officials in Seoul are already talking about ways to have its local rival take over any valuable assets the beleaguered shipping firm still has.

Jeong Eun-bo, vice chairman of the Financial Services Commission, floated the idea in an emergency meeting early morning Wednesday, while Hanjin’s board of directors voted to file for court receivership. 


“With Hanjin Shipping filing for court receivership, there is a worrying view that Korea’s shipping industry as a whole may lose its global competitiveness,” he said.

“We will actively push for the idea to have Hyundai Merchant Marine acquire Hanjin Shipping’s sound assets such as ships, routes, global networks and human resources.”

Hanjin, Korea’s No. 1 and the world’s No. 7 container carrier that handles a big chunk of the country’s exports, is fast sinking under losses and unpaid debt, putting its clients -- major Korean exporters like Samsung Electronics -- as well as industry peers and government officials on edge.

Hyundai Merchant Marine, which ranks second locally and 14th globally, is in the same trouble as Hanjin and other global shipping companies, with its problems stemming from overcapacity and the elusive recovery of global marine trade.

Yet it is seen relatively better off now, with creditor-led restructuring of debt going on. HMM, after a protracted negotiation with ship owners, has managed to cut the fees it pays to them for the charted fleet, while securing 1.2 trillion won ($1.08 billion) through the sale of its controlling stake in an affiliate and by cutting its capital by 87 percent to improve its balance sheet.

Hanjin Shipping, however, failed to win over creditors.

On Tuesday, the state-run Korea Development Bank, a main creditor, said the lender decided to withdraw all support of Hanjin, rejecting its proposal to raise 500 billion won of fresh funds as “insufficient” to cover the imminent cash shortage the company faces.

Hanjin would need 1 trillion to 1.3 trillion won in cash to roll over debt, they claimed.

Shares in the firm plunged to a six-year low Tuesday on news of the creditor cutting the lifeline. Trading was halted Wednesday.

Industry insiders say Hanjin stands only a very slim chance to survive. The firm is already seeing its vessels arrested by debtors overseas and denied access to some ports as their operators demand Hanjin make advance payment in cash for service charges.

“More ship arrests are likely to follow. The firm is highly likely to be kicked out of the global shipping alliance as well,” an industry insider said.

Yang Chang-ho, a professor at Incheon National University, predicted that once shipping operations halt due to those reasons, Hanjin will be in a very difficult situation to make a return, even if the court decides on a corporate rehab, not liquidation.

By Lee Sun-young  (milaya@heraldcorp.com)