The fate of liquidity-stricken Hanjin Shipping will be determined this week, hinging on a rescue from the parent group or its chairman Cho Yang-ho, to avoid court receivership and insolvency.

According to sources on Monday, Hanjin Shipping’s majority shareholder Hanjin Group will determine whether it will give financial support to the affiliate this week. A high-ranking official at the shipping industry said "Hanjin Shipping will brief Hanjin chairman Cho Yang-ho the company’s liquidity status and Cho will make a final decision on the support.

“The liquidity support for Hanjin Shipping cannot be realized unless Cho makes a decision. I understand Hanjin Group will announce Cho’s decision sometime on Wednesday or Thursday,” the official said.

State-run Korea Development Bank and other creditors also have set a kind of deadline for this week to press the group to come to a decision and show will to salvage the shipping company.

A KDB official said "creditors’ joint management of Hanjin Shipping will expire on September 4, but given the time it takes to discuss further liquidity, the company needs to come up with feasible self-rescue plan this week. The company cannot be rescued if actions are delayed.”

Even if the ongoing talks on vessel lease fees and ship financing are settled, Hanjin Shipping still would be short in around 700 billion won to run business until next year. Earlier, Hanjin Group said it can raise some 400 billion won by selling new shares, which fall short of creditors’ expectations.

In short, unless Cho has the group units pull up more than 400 billion won for the cargo carrier within the week, Hanjin Shipping is very likely headed for court receivership.

Hanjin Shipping must complete the adjustment of vessel lease fees and private loans restructuring by September 4 when the current joint management is over. But creditors are demanding Hanjin Group should make more efforts to resolve the company’s liquidity problem on its own.

Hanjin Shipping needs 1 to 1.2 trillion won until next year to stay afloat. Hanjin Group’s earlier idea for self-rescue was to postpone the repayment of principal of 500 billion won on ship financing, slash vessel lease fees by 27 percent and extend liquidity support of 400 billion won on its own.

But the negotiations progressed only in part. Any shortfall from the target amount should be burdened by the business group. For ship financing loans, the company received approval for the postponement from 10 domestic and overseas financial institutes, but talks with HSH Nordbank and BNP Paribas have yet to be completed.

By Chung Seok-woo and Yoon Jin-ho

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