South Korea pushes 32 companies to restructure debts

Korea’s Financial Supervisory Service said Sunday it is pushing 32 companies to restructure debts through voluntary workouts or court receivership programs.    Korea’s Financial Supervisory Service said Sunday it is pushing 32 companies to restructure debts through voluntary workouts or court receivership programs, according press accounts from KBS World Radio and the Korea Herald.
   “After a rigorous credit screening and evaluation of some 600 companies that borrowed more than 50 billion won (U.S. $45 million) from the financial sector, the regulator graded 13 companies ‘C’ and 19 ‘D.’ The C-graded companies, including liner carriers Hanjin Shipping and Hyundai Merchant Marine (HMM), will be under creditor-led workout programs, while the D-graded companies, including STX Offshore & Shipbuilding, will be under court receivership,” the Korea Herald said.
   The South Korean media outlet also noted that Hanjin and HMM already issued their own set of self-rehabilitation programs to their creditors.
   Last Friday, Hanjin said its creditor banks had approved giving it an additional month to work on its voluntary restructuring process, which involves renegotiating charter rates on containerships and loan terms.
   Hanjin “is still in talks with charterers and all I can tell you is that we are diligently carrying on the discussion with all of them,” a spokeswoman from Hanjin said.
   Seaspan, which has three ships on charter to Hanjin, said last month it would not reduce rates on ships it charters to Hanjin.
   Danaos, which derived 17 percent of its revenues from Hanjin last year, said it is still in talks with the company.
   However, Danaos revealed last week when reporting its second quarter earnings, that it did agree to a 20 percent charter reduction to HMM for the next three and a half years, in exchange for $39 million in debt notes maturing in 2024 and 4.6 million common shares in HMM. Last year, HMM accounted for 28 percent of Danaos’ revenues.
   Hanjin did not comment on press reports that Korea Air Lines has agreed to inject 700 billion won into the company.
   Meanwhile, as part of its restructuring and debt for equity swap, HMM listed additional shares last week with the number of shares increasing from 35 million to about 185 million. Stock fell sharply last Wednesday from 10,700 Korean won to below 8,000 won. They closed at 7,170 won at the end of Monday.
   HMM’s new shareholders, except creditors who have a lock up period for five years – including Korea Development Bank – “had a right to sell their shares two days prior to new listing,” a spokesman said. “That’s the reason why we assume HMM’s stock price went down on Aug. 3, which was two days prior to new listing.”
  

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