As criticism mounts against the government and creditors for putting the reputation of Korean exports on the line amid insolvency concerns over Hanjin Shipping, state-run Korea Development Bank offered to extend immediate loans to troubled shipper on top of emergency funding from the latter’s largest shareholder Korean Air.

Hanjin Shipping would be given 160 billion won ($143 million) to get its shipping operations normalized and unload cargoes stranded at seas after ports turned its fleet away following the news of it going under court receivership early September.

Shares of Hanjin Shipping slipped to 1,150 won as of 1:20 p.m. from 1,160 won previous closing after shooting up to 1,370 won earlier in the day upon the news.

Korea Development Bank (KDB), the shipper’s primary creditor, provisionally decided to lend Hanjin Shipping 50 billion won within the month backed by the carrier’s accounts receivables. KDB would have to be paid before any other creditors when Hanjin receives payments for its deliveries.

The state bank, however, will condition that the shipper digs into its loan only after it uses up all of the funding from Korean Air, Hanjin Group Chairman Cho Yang-ho and former Hanjin Shipping Chairwoman Choi Eun-young.

Earlier this week, the board of Korean Air agreed to give out 60 billion won to Hanjin Shipping backed by accounts receivables as well as real estate properties at home and abroad. Korean Air will provide 15 billion won in subordinated loans to Hanjin Shipping on collateral for its staff residence buildings in Seoul and Busan, 10 billion won in senior loans backed by its office building in Atlanta, the United States, and 35 billion won in subordinated loans on collateral for Hanjin Shipping receivables.

Korean Air will not be able to receive repayment of 35 billion won until KDB is paid in full.

Separately, Cho gave up 40 billion won and his sister-in-law Choi 10 billion won out of their own pockets to help the shipper.

The state bank and the shipper’s bankruptcy court administrator have agreed on the terms of the immediate financing plans. An unnamed official from KDB said that the loans will reach Hanjin Shipping by early next week at the latest upon deciding on the details such as the lending rate and structure.

The Financial Services Commission and KDB made it clear that this will be the last public funding for the shipper.

By Chung Seok-woo, Yoon Jin-ho and Kim Yoon-jin

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]