Creditors may give Hanjin Shipping more time to restructure

[THE INVESTOR] Creditors, led by the state-run Korea Development Bank, plans on giving some breathing room to Hanjin Shipping to stay afloat, by extending the due date of its corporate rehabilitation program.

KDB and other banks will convene a meeting sometime this week to extend the initial Aug. 4 deadline by a month for Hanjin Shipping, according to sources. 

The move will help the ailing shipper to gain more time to improve its financial status to avoid court receivership. 

Earlier in May, the creditors decided to initiate a corporate rehabilitation program with conditions attached. Under the requirements, Hanjin Shipping has to cut charter fees, join the global shipping alliance and extend the debt maturity, among others.

Charter fee rate is the remaining hurdle for Hanjin Shipping as it is still negotiating with the foreign vessel owners to reduce rates.

The creditors have also asked the company to secure an extra 1.2 trillion won (US$1.05 billion) for its operation cost next year. The company announced the plans to raise about 411 billion won by selling its key assets and rights. Hanjin, however, is still short by 8 billion won, even if it successfully collects the proposed amount.

By Ahn Sung-mi (sahn@heraldcorp.com)