SEVERAL hundred Filipino seafarers stand to lose their jobs after the troubled South Korean shipping giant Hanjin filed for court receivership on Wednesday, putting the future of the world’s seventh-largest carrier and its 5,000 employees in serious doubt.
The move came after Hanjin’s biggest creditor, the Korea Development Bank (KDB), rejected the company’s last voluntary restructuring plan to deal with its ballooning debts, which have reached 5.6 trillion won ($5.6 billion) according to a report by Maeil Business News Korea.
KDB and analysts said Hanjin would need to generate 1 trillion to 1.2 trillion won ($1 billion to $1.08 billion) from a restructuring plan to keep the company running until next year.
Impact on PH seafarers uncertain
Efforts to find out how many Filipino seafarers will be affected by Hanjin’s crisis were largely unsuccessful, but a representative of the Maritime Industry Authority (Marina) provided an estimate of “several hundred.”
Marina referred The Manila Times’ inquiry into the number of affected seafarers to the Philippine Overseas Employment Administration.
The agency however only kept data according to job classification and country, and had no information on specific employers.
A visit to the Roxas Boulevard address of the offices of TL2 Shipping Agency, which has been Hanjin’s agent in the Philippines since July 1, was also unsuccessful, with the building security reporting the office was closed.
Messages sent to the numbers listed for TL2 in a Hanjin customer advisory dated June 22 were also not returned.
However, the Subic Bay shipyard of Hanjin Heavy Industries, which employs some 28,000 people here in the Philippines, is unaffected by the woes of Hanjin Shipping.
Hanjin Heavy, despite having some common owners with the Hanjin Group, separated from the latter in 2005.
“There is no relationship between the two companies,” including any pending orders or other transactions, Trade Secretary Ramon Lopez said, after reporting he had been in touch with Hanjin Heavy to inquire about the news reports involving Hanjin Shipping.
The plan included a fund-raising scheme that would have seen Korean Air Lines, the shipper’s largest shareholder and part of the Hanjin group, take part in the shipper’s rights offering program and reduce the airline’s 33.23 percent equity stake through the cancellation or repurchase of shares.
Hanjin would have also renegotiated vessel leasing fees to lower them by 27 percent, rescheduled some 300 billion won ($270 million) in ship financing, and put its terminal in the Long Beach, California port complex up for sale.
KDB and the other creditors – who were not identified in the various news reports – rejected the plan, saying it was little improved over an earlier version Hanjin had submitted, and would likely generate no more than 500 billion won.
If the plan had been accepted, the creditors would have likely converted about 700 billion won of the 5.6-trillion total debt to equity, which would have gained Hanjin about a year in which it could operate normally while working to reduce its remaining debt.
On the Korean Stock Exchange (KOSPI) Wednesday, Hanjin’s shares plummeted from 1,595 won to 1,240 won, a loss of 24.16 percent, before trading was halted at midday. For the year, the share price had lost more than 66 percent.
Reports from several sources also said Hanjin ships were being turned away from ports in different locations including Spain and China as early as Monday this week, and that one ship, the Hanjin Rome, was seized by creditors in the Port of Singapore on Monday.
The prospect of more ships being seized sent forwarders and other shipping lines scrambling to locate and secure cargos aboard Hanjin ships.
“In reference to media reports stating a potential bankruptcy of Hanjin Shipping, we are closely monitoring the situation to ensure your cargo is protected,” a customer advisory released late Wednesday by Hanjin competitor Cosco Container Lines read.
Late Thursday, two Hanjin ships bound for the Port of Long Beach were reported to be stranded and unable to enter the port, while a third outbound ship from Long Beach to Japan had anchored outside the harbor.
In Prince Rupert, Canada, Port Technology reported that a Hanjin ship was stranded at the terminal, with cargo operations halted.
In its own statement announcing its filing for receivership, Hanjin Shipping said, “Even under court receivership, the Company will exercise its utmost efforts to fulfill its duty to protect the interests of customers. In this regard, we would like to ask for your kind cooperation in our continued efforts to resolve various issues that may arise upon filing for and during the course of court receivership.”
Hyundai to step in
Also late Thursday, Business Korea reported that a deal had been tentatively reached for Hanjin competitor Hyundai Merchant Marine to absorb Hanjin’s core assets, with the aim of merging the two companies.
Details of the arrangement, which was reportedly being managed by Korea Development Bank, were not provided. The deal is estimated to be worth between $260 million and $400 million. BEN KRITZ