South Korea’s Hanjin Shipping, which has been trying to boost its liquidity since 2013, is considering selling its stake in H-Line Shipping.
The sale could secure KRW150 billion (USD139.35 million) for Hanjin, South Korea’s biggest container shipping company. Media reports claim the company aims to secure KRW700 billion.
In June 2014, Hanjin Shipping spun off its dry bulk and LNG shipping businesses for USD298 million. The divested units were combined under a new entity, H-Line Shipping, of which Hanjin retained a 22.2% stake and private equity firm Hahn & Company bought a 77.8% stake.
H-Line Shipping took over seven LNG carriers and 29 bulkers and related shipping contracts from Hanjin Shipping, which has been focusing on container shipping ever since.
However, as container shipping continues to struggle amid a deluge of ultra-large container ships, Hanjin Shipping is now considering offloading its stake in H-Line and ending all links to LNG and dry bulk shipping.
In a Korea Exchange filing on 2 October, Hanjin Shipping confirmed that it is considering selling its stake in H-Line Shipping to boost its liquidity. No deal has been fixed and the company hopes to reveal more in a month’s time.
Korean media reports say that Hanjin’s need to secure more funding has only gained urgency after it failed to sell its container terminal in Algeciras, Spain.
Hanjin Shipping’s troubles were exposed in late 2013 after two consecutive annual losses. Its affiliate Korean Air gained control of the company through a KRW400 billion capital injection. That saw the airline’s CEO Cho Yang-ho becoming Hanjin Shipping’s CEO also.