Dive Brief:
- Both the operation rights and human resources arm of Hanjin's Asia-US line, plus seven overseas subsidiaries with essential business information, were sold to the Korea Line for $31.4 million, the Korea Herald reported Tuesday.
- The sale was completed in part to repay debt, since as of the end of 2015, Hanjin had $5.7 billion in debt and a debt to equity ratio of nearly 850%. Further assets remain on the table, however, including five Hanjin ships and its 54% stake in the Long Beach, CA terminal.
- The Korea Line remains on the fence in regards to these assets, stating that it will hold discussions with Hanjin regarding the additional purchase before its first right to purchase option expires on January 5, 2017, The Wall Street Journal reported Tuesday. Korea Line denied speculation that they are unable to afford a further purchase.
Dive Insight:
Hanjin has not yet escaped its troubles since its August 31 declaration of bankruptcy, thanks in part to only partial solutions and a seeming inescapable debt load.
While Hanjin struggles to repay its debt, the piecemeal sale of its assets makes a small dent in its debt obligations. The September sale of 3 cargo ships netted the company an additional $39 million, but it is unlikely that Hanjin's remaining assets will suffice for a full discharge of remaining debts.
On the other side of the coin, numerous retailers and others are lining up to protect their claims for repayment by filing papers in the US Bankruptcy District Court in New Jersey. The retailers' primary concern is that, under the Chapter 15 status, they may see their claims either impaired of eliminated entirely.
Ultimately, both sides may lose, as both the sale of assets as well as retailers' attempts to protect their debt interests will be insufficient to make the parties whole. Meanwhile, the once mighty carrier will continue to sink into liquidation.
