Global – South Korea’s largest shipping group Hanjin is set to enter receivership because its creditors are refusing to provide further funding for the indebted business. The world’s seventh-largest container line is facing a cash shortage after failing to persuade key lenders to reschedule debt under a new restructuring plan, reports the BBC. The group has been unprofitable for four of the last five years.
Hanjin may obtain some financial relief courtesy of rival Hyundai Merchant Marine (HMM), shares in which jumped by as much as 22% after South Korea’s financial regulator said the firm might buy some of Hanjin’s assets. However, HMM itself has not been spared from the sector’s woes and recently announced a reorganisation plan too.
South Korea’s shipping and shipbuilding industry has been one of the hardest-hit by a prolonged downturn in global trade. A drop in orders has led to overcapacity and depressed freight rates, as well as an increase in debts. The country’s government has announced that it is looking to undertake a painful reorganisation of the entire industry which will require major retrenchment.