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Hanjin Shipping chief steps down, takes responsibility for massive debt

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(Credit: Reuters) Workers unload containers from a cargo ship in China.Asian shipping
November 11
8:25 AM 2013

Hanjin Shipping Co Chief Executive Officer Kim Young Min stepped down from his post as head of the shipping company. According to a Bloomberg report, Kim's resignation was months shy from his term ending in March 2015. He was appointed chief of the largest shipper in South Korea in January 2009, coming in with 20 years of working experience with Citigroup Inc.

Kim's resignation came at the heels of the Asian company struggling to keep itself afloat due to massive debt. Last month, Hanjin engaged in a loan agreement with affiliate Korean Air Lines Co to help the former out of its liquidity shortage temporarily. Korean Air provided the shipper KRW150 billion or USD141 million. Korean Air is Hanjin's majority shareholder.

Seoul-based Korea Investment & Securities Co analyst Yun Hee Do said, "There's no good news for Hanjin right now. The company hasn't been able to make money recently and its interest payment has been increasing. There's quite a sizable amount of debt coming due next year for Hanjin."

According to data collated by Bloomberg, Hanjin is KWR736.4 billion in debt and loans that would be maturing next year. The news agency observed that this was a significant increase from the KRW58 billion the shipper had incurred this year. Hanjin's current cash and cash equivalent as of June 30 was only KRW506.6 billion.

Hanjin sold convertible notes in Jully 2011. Interest rates bumped 9.232% today from 9.184% at the beginning of November.

Korea Economic Daily cited anonymous company officials who said Hanjin was considering selling new perpetual bonds, loans and shares to help repay its bonds and recoup losses. Hanjin Shipping spokeswoman Sonya Cho confirmed that a share sale was one of the options the shipper was considering to do. Maeil Business Newspaper also said today lenders including Korea Development Bank might provide short-term loans to Hanjin. The paper cited anonymous officials in the financial industry.

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