South Korean private equity fund Hahn & Co to pay $283M for Hanjin Shipping's bulk shipping unit

By Nicel Jane Avellana

Dec 26, 2013 07:05 AM EST

Hahn & Co will be paying $283 million or KRW 300 billion to acquire a stake in the bulk shipping company of Hanjin Shipping Co, Bloomberg reported. Hahn & Co is a private equity fund based in South Korea while Hanjin Shipping is the biggest sea cargo carrier in South Korea. The report said the stake sale is part of the carrier's plan to raise funds and reduce debt.

In an emailed statement to Bloomberg, Hanjin Shipping said the private equity firm will hold a 76% stake in the bulk carrier business while the rest of the stake will be owned by the Seoul-based cargo liner.

Last week, Hanjin said it intends to raise KRW 1.97 trillion through asset and stake sales so it will be able to pay down debt. The report said the three largest companies in South Korea are all facing a cash crunch with KRW 3 trillion worth of bonds due to be repaid in the next two years as losses mount from the global slowdown in cargo rates.

Hahn & Co will be controlling a firm comprised of 36 vessels which is currently operated by Hanjin Shipping under long-term agreements. The private equity firm will also be investing KRW 100 billion to the venture, the report said.

The statement said that Hanjin Shipping's debt-to-equity ratio will drop from 987% to 673% at the end of September after the venture will begin to operate as early as April. The debt amounting to KRW 1.4 trillion that is carried by the 36 vessels will also be moved to the venture.

Hahn & Co has KRW 850 billion of assets under management in the auto parts, cement and electronics components sectors. It also dropped an offer in February for Korea Line Corp, the second largest bulk ship operator in the country that was then placed under court receivership, the report said.

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