Hanjin Shipping Co., South Korea’s largest container operator by capacity, has applied for a creditor-led debt restructuring to avoid bankruptcy, reviving talk of a possible merger with rival Hyundai Merchant Marine Co.
Hanjin, a unit of Hanjin Group, which also controls Korean Air Lines Co., submitted a formal request on Monday to state-run Korea Development Bank (KDB), its main creditor, to restructure its debt and provide an aid package in return for self-rescue efforts such as asset sales, The Wall Street Journal reported.
Hanjin’s shares plunged by the daily limit of 30 percent to a record low Monday as investors fretted about the future of the company.
A KDB spokesman said Hanjin Group chairman Cho Yang-ho offered to hand management control of the company to creditors.
KDB said it would review the proposal with other creditors and decide by next week whether to offer assistance to Hanjin, which might include a debt rollover.
If creditors reject the proposal, the company will be put under court receivership.
Shipping companies worldwide have been hit by years of slumping demand, particularly from China, forcing some to sell vessels at a discount to survive.
A handful of smaller operators have already gone bankrupt.
Hanjin and Hyundai Merchant Marine, which handle the bulk of South Korea’s exports, have been unprofitable for several years, amassing debts in a global shipping market awash in excess capacity and plummeting prices.
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