SEOUL: Shares of South Korea’s struggling Hanjin Shipping rebounded strongly Thursday on news it will receive fresh funds of almost $100 million, after its collapse caused global turmoil on the high seas.
The shares in the world’s seventh largest shipping company jumped some 30 per cent after Korean Air, its largest stakeholder, late Wednesday approved an emergency loan of 60 billion won ($54 million) to Hanjin Shipping.
Its largest creditor, Korea Development Bank (KDB), agreed to lend up to 50 billion won to Hanjin Shipping.
“The injection of the fund will be completed this week,” KDB said in a press statement, adding the bank will take Hanjin Shipping’s accounts receivable and some of its real estate as collateral.
The firm is seeking bankruptcy protection at home and in the US after creditors refused to further help Hanjin, which is groaning under $5.37 billion of debt.
The Korean Air loan is part of a 100 billion won emergency fund pledged earlier by Hanjin Group, the conglomerate that has Hanjin Shipping and Korean Air under its wing.
A further 10 billion won was also given by Hanjin Shipping’s former chairwoman Choi Eun-Young.
Hanjin is seeing its debts mount every day and the new loans will mainly settle overdue payments for cargo handling and other debts that have caused its vessels to be marooned at sea.
Analysts said the fresh injection of funds would help in the short run.
“This will help put out the immediate fire,” Cho Byung-Hee, an analyst at Kiwoom Securities Co. in Seoul, told Bloomberg in reference to the Korean Air loan.
“This will help unload cargo to ease the disruptions. But what would happen after for Hanjin is another issue.”
