Korean Air delays funding decision for troubled Hanjin Shipping
By Hyunjoo Jin
SEOUL (Reuters) – Korean Air Lines, the biggest shareholder in Hanjin Shipping, on Friday delayed a decision on a funding plan for the troubled company for a second time, adding uncertainty to cargo stranded at sea following the failure of the world’s seventh-largest container carrier.
Around $14 billion of cargo has been tied up globally as ports, tug boat operators and cargo handling firms refuse to work for Hanjin because they fear they will not be paid.
“We haven’t reached a conclusion at today’s board meeting, so we have decided to discuss the matter again tomorrow,” a spokesman for Korean Air Lines said.
Shares of Korean Air were traded down 5% in morning trade.
Banks led by state-run Korea Development Bank (KDB) withdrew backing for Hanjin last week, saying a funding plan by its parent group was inadequate to tackle debt that stood at 5.6 trillion won ($5 billion) at the end of 2015.
The collapse of Hanjin has caused havoc in global trade networks and a surge in freight rates, as more than half of Hanjin’s 141 ships have been blocked from docking at ports. Some vessels have also been seized.
“I’m aware that some exporters are going through considerable difficulties from the Hanjin Shipping incident,” Bank of Korea Governor Lee Ju-yeol said at a press conference in Seoul.
“However, the impact on the economy won’t be big if measures in place from the government including deployment of alternative vessels are carried out smoothly.”
Hanjin’s collapse came during the peak shipping period ahead of the year-end holiday season, stranding cargo for the likes of HP Inc and Samsung Electronics Co Ltd.
Samsung on Thursday asked a U.S. judge to allow the South Korean company to pay cargo handlers to remove its goods from Hanjin Shipping vessels stationed near U.S. ports.
Hanjin’s parent firm, Hanjin Group, earlier pledged to raise 100 billion won in funds to help rescue cargo.
Hanjin Group planned to raise 60 billion won by putting up as collateral stakes in overseas terminals such as Long Beach Terminal and other assets, while Hanjin Group chairman Cho Yang-ho will raise 40 billion won from private funds, the group said in a statement.
The court presiding over Hanjin’s receivership asked the state-backed Korea Development Bank on Wednesday for fresh funds to normalise operations but met resistance.
($1 = 1,099.8000 won)
(Additional reporting by Cynthia Kim; Editing by Lincoln Feast)