The South Korean government reiterated that there would be no more bailout for Hanjin Shipping Co. and the country’s largest cargo carrier is headed for insolvency if it fails to turn itself around through latest debt relief program.

Hanjin Shipping is currently negotiating new charter lease terms and rescheduling debt with bondholders and lenders. “If it cannot combat liquidity woes on its own and fails to normalize business, the shipping company will be dealt according to principles,” said Financial Services Commission Chairman Yim Jong-yong in a press conference on Wednesday.

Market experts see Hanjin Shipping, the nation’s largest container carrier, needs to raise additional 1.2 trillion won ($1.1 billion) during the next year and a half to stay afloat. The shipper submitted a plan to raise 400 billion won to its creditors, hoping to get additional support on the remainder from creditors. But the creditors maintained that Hanjin Group should put up 700 billion won to 900 billion won to help its troubled shipper.

The country’s second-largest container carrier Hyundai Merchant Marine Co. has come under creditors’ management following debt-to-equity swap relief. The state bank will replace the chief executive and management and strengthen competitiveness by improving vessel operation schedule, obtaining long-term shipping contracts, and securing overseas terminals, said Yim.

The three largest shipbuilders Daewoo Shipbuilding & Marine Engineering Co., Hyundai Heavy Industries Co., and Samsung Heavy Industries Co. are carrying out stringent streamlining to raise capital or save cost worth 10.3 trillion won to fight current hard times, said Yim. The government commissioned a study on the local shipbuilding industry to outline a restructuring program for the country’s dockyards, and the study results are scheduled to come out late August, said Yim.

By Chung Seok-woo

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