Hanjin in Talks to Sell Stake in Long Beach Terminal
21 October 2016 - 3:37PM
Dow Jones News
By Costas Paris
Korea's Hanjin Shipping Co. is in talks with Swiss shipping
giant Mediterranean Shipping Co. to sell its stake in the Long
Beach Terminal as part of a plan to dispose most of its oversees
assets after filing for bankruptcy protection in August, people
involved in the matter said Friday.
The talks involve Hanjin's 54% stake in Total Terminals
International LLC, which runs Long Beach Terminal in California.
MSC owns the remaining 46%.
The Wall Street Journal reported last week that Hanjin, has
reached out to European shipping majors and Korean peer Hyundai
Merchant Marine Co. to sell assets, including five, 13,000
container ships, as part of a restructuring plan that will see it
emerge as a small, intra-Asia operator.
People involved in the process said Hyundai will be first in
line to cherry-pick on Hanjin's ships, which include five
13,000-container vessels. Both the Korean government and Hanjin's
main creditor, Korea Development Bank, have said they would back
HMM in buying Hanjin assets, provided such a move would help it
stay competitive. KDB is also HMM's main creditor.
HMM is looking to secure Hanjin's slice of moving Korea's
exports to Western markets, but would need more capacity to achieve
it and keep bigger competitors like MSC and Denmark's Maersk Line
from winning major shipping contacts from electronics behemoths
like Samsung Electronics Co. and LG Electronics Corp.
Before filing for bankruptcy protection, Hanjin was the world's
seventh largest operator in terms of capacity. The restructuring
plan must be approved by a bankruptcy court in Seoul, and if
rejected, Hanjin will be liquidated.
At the end of the second quarter, Hanjin had total debts of $4.2
billion.
The Long Beach Terminal has the capacity to handle 3 million
containers a year and fit to serve midsize container ships with a
capacity to move around 10,000 containers.
The bankruptcy court handling Hanjin's insolvency proceedings
has said it plans to dispose of the firm's sales and marketing
network for its Asia-U.S. route as well as some ships. Hanjin said
it would receive letters of interest by Oct 28. and binding bids by
Nov. 7.
The port of Long Beach said earlier this month that container
volumes in September fell 16.6% from a year ago, as the effects of
the Hanjin bankruptcy reached West Coast ports. Hanjin Shipping
accounted for about 12.3% of the port's total containerized
volume.
Beyond the five 13,000-container vessels, the remaining of
Hanjin's 37-ship fleet are mostly Panamaxes, which carry fewer than
10,000 containers. Such vessels are becoming obsolete in the wake
of the widening of the Panama Canal earlier this year. That
expansion allows ships moving 12,000 containers or more to pass
through the isthmus.
Write to Costas Paris at costas.paris@wsj.com
(END) Dow Jones Newswires
October 21, 2016 10:22 ET (14:22 GMT)
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