Sunday, December 22, 2013

Container Shipping and Bulk Cargo Line Aided by Sister Air Freight and Passenger Carrier

Sale of Assets Reported as Box Line Feels Pressure of Low Rates
Shipping News Feature

SOUTH KOREA – According to local reports, the country’s national freight and passenger carrier Korean Air plans to raise 3.5 trillion won ($3.3 billion) by selling its stake in oil refiner S-Oil and some of its assets, in order to support its struggling sister company Hanjin Shipping. Korean Air has already provided 150 billion won ($141 million) earlier this year to help ease Hanjin Shipping’s approximate 736.4 billion won ($693 million) debt. Many of the world’s box lines have been hit hard by the industry’s overcapacity and consequent low container shipping rates.

Korean hope to raise approximately 2.2 trillion won ($2 billion) from selling its 30 million shares in S-Oil, with plans to raise another 1.04 trillion won ($980 million) from the sale of 13 of its older planes for 250 billion won ($235 million) with property and other asset sales making up the difference. Hanjin has also said that it is selling assets including its dry-bulk business and stakes in port terminals, to raise 1.53 trillion won ($1.45 billion).

Hanjin Shipping’s Chief Executive Officer Kim Young Min recently resigned after the business saw two successive years of losses and a delay in getting financial support from creditors. The company aims to get loans from creditors worth about 444 billion won and plans to dispose of old vessels and shut down unprofitable routes. In the coming year, Hanjin is aiming to pay back 1.25 trillion won of its debt with another payment in 2015 of 1.08 trillion. 

Kim Young Min’s departure leaves Ms Eun Young Choi as sole current Chairman and Chief Executive Officer of Hanjin Shipping, and who also serves as the Chairman of Cyber Logitech Co Ltd, which provides IT services to maritime and logistics outfits, principally Hanjin. Choi was appointed five years ago this week as co-CEO and, as the majority shareholder in Hanjin Shipping, with the apparent intention to calm concerned stockholders at the time. Ms Eun Young Choi was one of seven high profile Korean executives accused by the Korea Center for Investigative Journalism (KCIJ) earlier this year of transferring funds offshore to avoid tax, not by itself illegal, but in the current world financial climate often frowned upon, and a major talking point in Korea.

 Photo: Ms Eun Young Choi