Korean Air Lines Co., the biggest shareholder of South Korea’s troubled Hanjin Shipping Co., is seeking ways to provide the shipper 60 billion won ($53.4 million) in emergency funds sooner than expected to ease disruption in maritime traffic caused after the shipper filed for court receivership early this month. Tens of Hanjin Shipping’s vessels and cargoes are still stranded at sea.

According to Hanjin Group on Sunday, Korean Air called in board of directors for an emergency meeting to discuss fund support measures to ease turmoil in the overall supply chain triggered by the bankruptcy of Hanjin Shipping that has led to delayed deliveries with vessels being denied of call and unloading at ports.

An unnamed official from Hanjin Group said that the meeting was held to find measures to provide 60 billion won worth of funds that have been promised by Korean Air as soon as possible to ease industry turmoil caused after Hanjin Shipping filed for court protection. Multiple sources from the shipping industry noted that the conglomerate’s move came after President Park Geun-hye criticized Hanjin Group last week for its improper management that has led to the downfall of its shipping unit, warning that a company’s irresponsible and morally hazard management could put the national economy in jeopardy.

An unnamed official from the legal circle said Hanjin Group Chairman Cho Yang-ho took gravely of the issue of providing funds to Hanjin Shipping that he urgently called in directors for a meeting despite the holiday weekend.

On September 6, Hanjin Group said it would secure 100 billion won in funds including 40 billion won personal donation from Chairman Cho and 60 billion won by putting the shipper’s port terminal in Long Beach, California, as collateral. Last week, Cho has already transferred his share to Hanjin Shipping’s bank account but it is expected to take some time for Korean Air to secure the remaining 60 billion won in funds as it would need to receive approval from the port terminal’s seven other shareholders including Mediterranean Shipping Company S.A. (MSC) in order to hold the port as collateral.

The Korean government, meanwhile, has been pressuring Korean Air to come up with alternative measures to secure more immediate funds. Amid pressure, the national carrier is known to have asked its outside board to seek other available funds including accounts receivable that can be provided to Hanjin Shipping on collateral for assets other than those that need approval from other investors like port terminals.

Korean Air’s board was not able to reach a conclusion on how to provide 60 billion won worth of funds sooner at the meeting on Sunday as some directors opposed to the plan of providing funds to a company that has already entered court receivership. The board is expected to convene another board meeting soon to discuss the matter again.

If Korean Air successfully injects 60 billion won to Hanjin Shipping at an early stage, the troubled shipper would receive about 110 billion won worth of urgent funds, including 10 billion won from former Hanjin Shipping Chairwoman Choi Eun-young. However, total support funds still fall short of 170 billion won that is estimated to be needed to load and unload cargoes at ports to ease current disruption in maritime traffic. Korean Air is currently seeking other measures to secure additional funds amid government-led pressure.

By Kim Jung-hwan

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