Hanjin Shipping Co’s government-backed creditors are ready to provide the collapsed carrier with roughly 100 billion won ($90.60 million) of loans if Hanjin’s parent provides collateral, South Korean government officials said on Tuesday. The funding, however, is seen as falling far short of what the world’s seventh-largest container carrier needs after filing for court receivership last week when its creditors, led by Korea Development Bank (KDB), decided to halt support.
“The 100 billion won funding, if it comes to pass, is not nearly enough to save Hanjin Shipping at all – it will most likely be used to pay fees to unload stranded cargo going forward,” said an official at a creditor bank, who was not authorised to speak with media and declined to be identified.
Hanjin Shipping shares jumped as much as 28 percent on Tuesday morning before trimming their gains to be up 20 percent by 0155 GMT. They had hit a record low on Monday. Hanjin’s receivership filing has prompted ports around the world to block access or refuse service to dozens of the company’s ships on fears they won’t be paid, stranding cargo.
Hanjin Group, the parent of Hanjin Shipping, is considering whether to provide collateral to secure the loans, said a spokesman for its flagship unit, Korean Air Lines Co . Shares in Korean Air Lines, the biggest shareholder of Hanjin Shipping, fell as much as 5.7 percent on Tuesday. Hanjin Shipping had debt of 5.6 trillion won at the end of 2015. Last month, parent Hanjin Group submitted a plan to creditors pledging to raise up to 500 billion won for the troubled shipper, which KDB deemed inadequate.