The two wobbly Korean shipping groups Hyundai Merchant Marine, HMM, and Hanjin Shipping must reduce their debt significantly if they want to be eligible to receive financial aid from a new government fund established to help several suffering Korean carriers and yards.
The government in Seoul, along with banks and many financial institutions, will establish a new fund with USD 1.2 billion for the country's yards for newbuildings which the national carriers can charter on long-term contracts. The requirement for shipowners is that they reduce their debt to a manageable level.
"Only when shipping companies, such as Hanjin Shipping Co. and Hyundai Merchant Marine Co., meet the requirement of lowering their debt-to-equity ratio to below 400 percent from the current 600-800 percent, they can charter the vessels," said Ryu Jae-hun, director of the Korean Financial Supervisory Service (FSS) corporate restructuring division on Wednesday according to several Korean media sources.
South Korea's Financial Services Commission (FSC) will release a list of companies in June which are in danger due to bank debt.