South Korean shipbuilder Hanjin Heavy Industries and Construction (HHIC) is seeking to restructure its debt with its creditors.

HHIC said that it was experiencing liquidity shortage and has requested a voluntary agreement with its creditor Korea Development Bank (KDB) to approve a debt rescheduling scheme.

Hanjin has been posting losses for six years now due to a sluggish industry condition but also in part due to financial losses stemming from its investment in the Philippines-based Subic Shipyard.

Should the creditors decide to approve the restructuring plan Hanjin will be able to postpone its debt payment and secure financial backing that would enable the yard to remain afloat.

The shipbuilder’s debt stood at KRW 1.6 trillion (USD 1.34 billion) in November last year, including KRW 500 billion owed to KDB and KRW 210 billion to Hana Bank.

HHIC should have a reply on the request by the end of the month following a creditors’ meeting.

The company’s shares fell to a record low in Seoul on the back of the announcement, Bloomberg reports, with Hanjin Heavy’s shares dropping 22 percent, the biggest decline since the stock started trading in 2007 and its parent Hanjin Heavy Industries & Construction Holdings Co. dropping by 18 percent, the most since its January 1985 debut.

World Maritime News Staff