BREAKING NEWS: Hyundai Merchant Marine Taking Over Hanjin Shipping
Hyundai Merchant Marine will be buying some of the assets of Hanjin Shipping, Korea Business is reporting.
The carrier’s creditors and the South Korean financial authorities are reportedly on board with the move, which is designed to merge the two national-flag carriers at minimum cost. Estimates are that Hyundai will have spend between $270 million to $360 million on the asset acquisition.
Hanjin filed for receivership in a South Korean court earlier this week.
The core assets Hyundai Merchant Marine is looking to absorb include 37 vessels and the rights to manage the Long Beach Container Terminal, the Gwangyang Terminal, and the HPC Terminal.
Hyundai Merchant Marine itself only recently escaped receivership when it reached new charter agreements with shipowners to the satisfaction of its creditors in June. The renegotiation cut leasing rates by 21 percent over the next three and a half years.
Korea Development Bank, Hanjin’s principal creditor, is also a Hyundai lender, and it had threatened to force Hyundai into receivership if the carrier failed to negotiate the charter rate cut and get its bondholders to reschedule debt. Hyundai’s bondholders approved a $690 million debt rescheduling, under which more than half the debt will be exchanged for HMM shares.
Hanjin Shipping’s move into receivership has been in the works for months, if not longer, as the carrier is saddled with an estimated $5 billion in debt and Korea Development Bank has been refusing to go along with Hanjin’s self-rescue plans.
It’s unclear at this point how long the Hyundai acquisition of Hanjin will take to shake out, putting the fate of cargo currently aboard Hanjin vessels in limbo.
In the wake of the receivership, Hanjin vessels have reportedly been seized at Chinese ports and a Hanjin vessel in Singapore was confirmed arrested under a court order. North American ports and transportation providers are refusing to handle Hanjin ships and containers as is its alliance partner, Evergreen Line.
It may still be necessary for United States cargo owners to protect their interests in U.S. courts, according to a receivership law specialist in Los Angeles.
“Because many of Hanjin’s customers are located in the United States, there will be a need for a parallel U.S.-based legal proceeding,” said Richard Ormond, an attorney and partner in the law firm Buchalter Nemer. “Otherwise their goods and the Hanjin assets will be subject to the proceeding in South Korea—possibly denying U.S. located creditors their due process.”
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