Creditor banks on Monday struck down a self-rescue package drawn up by Korea’s largest shipper Hanjin Shipping Co. in return for reprieve in debt obligation, calling it insufficient as it lacks commitment from the parent group in doing utmost to keep the carrier afloat.

According to the Korea Development Bank (KDB), Hanjin Shipping submitted a self-rescue plan including the surrender of management control by Hanjin Group Chairman Cho Yang-ho and an offer to sell office buildings in Busan and London, a bulk carrier and trademarks to raise 411.2 billion won ($358 million). The shipper also pledged to endeavor to bring down charter cost and reschedule shipping finance and bond obligations. But the creditor group turned back the plan saying it was not satisfactory enough. Hyundai Merchant Marine, which sought creditors’ reprieve earlier included donation of personal funds worth 30 billion won from Hyun Jeong-eun, chairwoman of the parent Hyundai Group on top of the surrender of management control.

“We demanded detailed outline in normalization plans including ways to lower charter payments,” one bank official said.

If the bank fails to persuade creditor banks with its strategy to draw favorable terms over charters and secure 500 billion operating funds for the first half, the company would be denied of creditors’ bailout and instead go straight to court receivership.

Other creditors KB Kookmin Bank and KEB Hana Bank and National Federation of Fisheries Cooperatives made it clear that they cannot agree to new loans or rollover without convincing its self-rescue plot.

Hanjin must repay 170 billion won bank loan obligation by the end of June. Creditors estimate the shipper would be 500 billion won short in running business until June. Creditor banks offer to roll over immediately maturing debt, but decline to help out in the company’s other obligations. It wants the company or its parent group to raise capital on their own to pay deferred port, charter, and oil payments. How they can come up with 500 billion won immediately would decide the shipper’s fate of continuing normal operation or filing for bankruptcy.

By Cho Si-young, Seo Dong-cheol

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