Stock exchange suspends Hanjin shipyard for capital impairment

By Lim Chang-won Posted : February 13, 2019, 16:11 Updated : February 13, 2019, 16:11

[Courtesy of Hanjin Heavy Industries & Construction]


SEOUL -- Share trading of Hanjin Heavy Industries & Construction was suspended after the mid-sized South Korean shipyard reported capital impairment reflecting losses from the rehabilitation of its affiliate in the Philippines.

In a regulatory filing on Wednesday, Hanjin Heavy, a Hanjin group unit, reported impaired capital as its consolidated financial statement for 2018 reflected losses in HHIC-Phil, a debt-stricken shipyard in Subic, a coastal municipality northwest of Manila, which has applied for a rehabilitation program.

In January, a Philippine court approved the legal process of corporate rehabilitation for HHIC-Phil. Hanjin Heavy said that it is in the final stage of negotiations with Phillippine banks on rehabilitating the Subic shipyard.

Korea Development Bank (KDB) attributed Hanjin Heavy's capital impairment to the realization of $410 million in guarantee liability for the local financing of HHIC-Phil. The state policy lender said that domestic and overseas creditors will be able to rescue the Subic shipyard through capital expansion if negotiations are successful.

KDB was optimistic, saying the Hanjin shipyard in the southern port city of Busan has improved its financial status through restructuring and the disposal of non-core assets. The Subic shipyard suffered an operating loss of 182 billion won ($162 million) in 2016 and 233 billion won in 2017. Hanjin Heavy posted an operating profit of 73 billion won in 2018.

Hanjin Heavy is South Korea's oldest shipyard founded in 1937. Like other South Korean shipbuilders, the Hanjin shipyard has been kept afloat with money from creditors under a government-led restructuring program. In 2016, Hanjin Heavy received a bailout of 250 billion won.
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