Korea Line to buy Hanjin Shipping assets in surprise court d

Time: 2016-11-16 13:43
In a surprise decision, a South Korean court has awarded shipping operator Korea Line Corp. to acquire the assets of bankrupt Hanjin Shipping after outbidding Hyundai Merchant Marine Co. (HMM) by offering better terms, including retaining workers.
The midsize bulk-shipping operator has been granted the first right to purchase the assets of Hanjin's Asia-US route, as well as its stake in a California terminal.
The judge at the Seoul Central District Court, which is handling Hanjin's insolvency proceedings, said it chose Korea Line over Hyundai Merchant Marine Co., which had been expected to win.
Hyundai Merchant was backed by senior government officials and its main creditors, which said they would promote the company as the country's largest ocean going carrier, The Wall Street Journal reported.
"Korea Line proposed better terms, including higher prices," the judge said. "It also offered to take over more Hanjin employees."
The court aims to approve a contract next week with Korea Line, an operator of dry bulkers and liquefied-natural-gas carriers, and complete the sale process by the end of November, the judge said.
Neither the court nor Korea Line would reveal the value of the deal, but local media reports put the sale price at as much as KRW250 billion (US$215 million). Hanjin declined to comment.
People with knowledge of the matter said the deal involves Korea Line buying five Hanjin ships that can move 6,500 containers each.
"It will be the first foray into container shipping for Korea Line," said Lars Jensen, chief executive of SeaIntelligence Consulting in Copenhagen. "The ships they bought are just enough for one weekly service from Asia to the US West Coast, but that market is already very competitive and winning contracts will be a challenge."
HMM described as worrisome the decision to allow a much smaller company to acquire the Hanjin assets, but said it respected the court's judgment. "If we're given another chance to buy other assets of Hanjin later, we'll surely bid for them," the company said. "We're also interested in other terminals operated by Hanjin."
Despite the weak industry conditions, Korea Line and Hyundai Merchant have been seeking to expand their fleets. The Hanjin assets include five container ships, a business network and the workforce involved in running the trans-Pacific route, as well as a 54 per cent stake in Total Terminals International LLC, which runs Long Beach Terminal in California.
People involved in the matter said that Hanjin is in discussions with Mediterranean Shipping Co. to sell the terminal's operations.
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