|
Korea looks to bail out shipping with debt restructuring
2009/2/24
SOUTH KOREA''s government is considering debt rescheduling for the shipping industry as the global economic slowdown dampens demand for world trade, in an emergency meeting attended by President Lee Myung-bak.
This comes as the nation''s top four shipping firms, Hyundai Merchant Marine, Hanjin Shipping, STX Pan Ocean Shipping and Korea Line Corporation, have been suffering lower earnings. In late 2008, Park Road Corporation, a medium-sized shipping company, went bankrupt, while rival Samsun Logix applied for court receivership earlier this month.
"If the economic recession continues, earnings at shipping companies will be worse this year than last," said Song Jae-hak, an analyst at Woori Investment and Securities in a JoogAn Daily report. "In such conditions, some small and mid-sized shipping companies could collapse."
The analyst pointed out in the report that if one shipping company goes bankrupt others will be directly affected as ocean liners charter vessels from each other.
South Korea''s Ministry of Land, Transport and Maritime Affairs and the Financial Services Commission revealed that they have been holding talks about the shipping industry''s eventual overhaul.
"We are deliberating on whether to arrange restructuring in the shipping industry in the same way that we did in the construction and shipbuilding industries or to take other routes," said Chin Dong-soo, chairman of the Financial Services Commission, referring to two sectors that have already received government-supervised and creditor-led restructuring.
A ministry official who declined to be named in the article said: "Even if a builder is restructured [and is forced to sell the apartments it has been building], the apartments will still be in Korea. But if a shipping company is restructured, in many cases, it will have to sell the ships to foreign companies at dirt-cheap prices."
The government announced it would conduct a follow-up study on a second group of 94 midsize builders and four newly-established shipbuilders, in the aftermath of a recent credit risk study and the corporate restructuring of firms engaged in the two industries, the report added.
|
2009/2/25