The Korean container carrier Hanjin Shipping sold its 22.2% stake in H-Line Shipping to private equity firm Hahn & Company for 29.6 million USD in attempt to improve liquidity and cash flows. The finance-troubled company released the plans for sale of the remaining stake in H-Line Shipping in November 2015, but the lack of offers prolonged the deal until this week. Hanjin Shipping was pushed by creditors to complete the sale of its stake in the bulk carrier and LNG transport company in danger of bankruptcy and suffering serious liquidity problems. The transaction was completed yesterday and the full amount will be paid in cash.
Hanjin Shipping established the H-Line Shipping in 2014, as part of splitting the dry bulk and LNG transport businesses from the core unit. The total value of the new company was valued at 298 million USD and had 50 vessels, including 43 bulk carriers and 7 LNG carriers. Before the sale, the private equity firm Hahn & Company holds a 77.8% stake in the business, while the rest 22.2% were for Hanjin Shipping.
Hanjin Shipping already sold its office building in London for 57.2 million USD in March 2016, as the outstanding debt amounted to 406 million USD. The company applied for a creditor-led debt restructuring to avoid bankruptcy. Hanjin Shipping submitted a formal request to state-run Korea Development Bank, which is main creditor, to restructure its debt and provide an aid package in return for self-rescue efforts such as asset sales. The creditors will review and consider the restructuring proposal, but keep the company under pressure for sale of non-core assets.
Hanjin Shipping is South Korean largest and one of the world’s top ten container carriers in terms of capacity. The company operate 130 container vessels and transport more than 100 tons of cargo annually. Hanjin Shipping is part from Hanjin Group, but was hit by falling freight rates amid the global economic slump and high ship charter costs, the nation’s leading container carrier has been sitting on snowballing debt.