Hanjin Shipping yet to negotiate cut in charter rates

According to sources, troubled South-Korean shipping firm Hanjin Shipping Co. is yet to successfully negotiate a cut in leasing rates with the owners of its chartered ships, which was a key precondition set by its creditors to avert court receivership.

The company was yet to receive a favourable response from the owners of charter ships as of date. However, Hanjin’s struggle for the charter rate cut is in stark contrast to its smaller local rival, Hyundai Merchant Marine Co., which has reported “significant” progress in its charter rate reduction talks.

Hyundai Merchant, won approval from its bondholders for restructuring about KRW 800bn ($671m) of its debt during negotiatio

Based on information from certain sources, Hanjin Shipping faced difficulty in negotiations as it had to negotiate with a large number of shipowners.

Previously, a vessel operated by Hanjin Shipping was impounded for three days in South Africa for unpaid charter fees, raising concerns that the shipper’s financial status has dramatically worsened.

Last month, creditors of Hanjin Shipping accepted the troubled shipping giant’s debt restructuring plan, also granting a three-month suspension on all payments of principal and interest.

According to creditors, the self-restructuring plan would only be effective as long as all of the company’s lenders and shipowners chartered by Hanjin also remained committed.

Last month, the shipper’s bondholders approved some 36 billion won worth of debt recast proposal.

Separately, Hanjin Group’s, the parent company of Hanjin Shipping, chairman Cho Yang-ho agreed to give up his managerial control of the shipping unit under the self-rescue plan.

As of end-2015, the company’s total debt reached KRW 5.6tn.

Source: Hellenic Shipping News

Hyundai Merchant presses bondholders to approve restructuring plan

South Korean integrated logistics and container-freight transport company Hyundai Merchant Marine Co.’s bondholders plan to decide whether to approve the company’s debt restructuring offer during a two-day meet which continues till Wednesday.

During the meeting, Hyundai Merchant would propose a plan to swap more than half of its debt of approximately KRW 800bn ($672m) for equity and the payment of the remaining debt after two years.

Previously, creditors, led by state-run Korea Development Bank, agreed to swap KRW 680bn worth of debt for the company’s equity, as part of efforts to keep it afloat. Hyundai Merchant had debts of about KRW 5.2tn as of 31 March 2016.

The debt recast is one of the key prerequisites for the company to be put under a creditor-led rehabilitation scheme.

As part of its restructuring, Hyundai Merchant was in final talks with owners of its chartered ships to cut leasing rates, whose outcome may come out later this week. According to creditors, high charter rates were negatively impacting the company’s financial health, and a cut in the leasing rates was one of the key preconditions for the survival of the shipper.

Hyundai Merchant paid a total of KRW 1.9tn won to 22 owners of chartered ships in 2015, which accounted for 32% of its annual sales of KRW 5.8tn.

Creditors have also demanded that the shipper be included in a global shipping alliance to stay competitive. However, the company may be excluded from joining the group unless it cuts its charter rates and reschedules its debt.

Hyundai Merchant stated that its inclusion into a global shipping alliance would be guaranteed if it successfully negotiates charter rate cuts and its debt recast is approved by its creditors and bondholders.

Source: Yonhap News Agency

Hanjin Shipping to begin creditor-led debt restructuring

South Korea-based Hanjin Shipping reached an agreement with creditors who have agreed to offer financial assistance to the company and initiate a corporate restructuring program.

Creditor banks, led by state-run Korea Development Bank, approved Hanjin’s debt restructuring proposal at a meeting on Wednesday.

The conditions for the bailout include reduced charter rates that Hanjin pays out to foreign shipowners, retaining a global alliance membership and signing a debt restructuring agreement with bondholders.

The agreement comes days after Hanjing Shipping submitted a revised self-rescue measure to creditors on 2 May 2016.

The creditors plan to give a three-month maturity extension of principal and interest starting and roll out debt refinancing measures by hiring accounting firms.

The company plans to finalize negotiations with 22 shipowners by the end of May 2016. Further, it also plans to hold a meeting with bondholders on 19 May 2016 to extend the maturity date on KRW 35.8bn won of its bonds by four months.

Source: The Korea Herald