HANJIN Shipping could have survived if creditors had provided the company with aid, group chairman Cho Yang-ho told a parliamentary hearing in Seoul.
"We believe Hanjin Shipping's troubles could have been avoided if creditors had provided support," said Mr Cho, reported Bloomberg News.
"We had submitted to creditors a plan to inject KRW500 billion (US$451 million) into Hanjin Shipping over a two-year period."
Mr Cho apologised for the supply-chain disruptions and said the company suffered from fierce competition. A quick revival of Hanjin would be key to fending off competition, he said.
Hanjin Shipping controlled 2.9 per cent of the global container shipping market before its filing. As of September 21, its market share had fallen to 2.6 per cent, making the company the 10th biggest, falling from seventh place, according to Alphaliner.
Korean Air Lines, the biggest shareholder of Hanjin Shipping, agreed last month to provide KRW60 billion in new loans to help ease the cargo disruptions. The container company's main lender, Korea Development Bank, offered a conditional credit line of KRW50 billion and Mr Cho supplied KRW40 billion.
"It was an unavoidable situation derived from the aggressive supply of government-backed foreign shipping lines and their low price strategies," Mr Cho said in a parliamentary audit for the state-run Korea Development Bank. KDB is the main creditor of Hanjin Shipping.
"I felt our power was very limited as a private company. I apologise to the people for letting Hanjin Shipping face court receivership and causing a logistical chaos," he said, reported the Korea Herald.
Mr Cho said he made a confident investment of KRW2 trillion won to acquire Hanjin Shipping in 2014 because the shipping line was also a logistics business as Korean Air, the group's other subsidiary.
Hanjin Shipping had seemed to have competitiveness in sales and the ability to beat the recession at that time, he said.
Earlier at the hearing, KDB chairman Lee Dong-geol said Hanjin Group was responsible for the recent logistical chaos in the shipping industry.
"We have explained a numerous times [to Hanjin] that it could face court receivership if it fails to secure much needed capital by itself. But Hanjin waited for the creditors' capital support," Mr Lee said.
"We called on the CEO of Hanjin Shipping and the CFO of Hyundai Merchant Marine to come up with contingency plans in case of logistical chaos. But Hanjin refused to do so citing worries over breach of trust."
Mr Lee said his bank decided to let Hanjin face court receivership because Mr Cho lacked the will to sacrifice himself as the largest stakeholder to secure more cash, while Hyundai Group decided to sell Hyundai Securities to raise money.
If Hanjin Shipping fails to avoid liquidation, about 63 per cent of its logistics capacity will be taken by overseas shipping companies, according to Representative Park Yong-jin of the main opposition Minjoo Party of Korea during the audit.
Citing a report submitted by the state think tank Korea Maritime Institute, Park said out of the 1.88 million TEU managed by Hanjin Shipping, 1.18 million TEU will be absorbed by foreign shippers, if the Korean line is liquidated. Only 320,000 TEU or 17 per cent will go to the local No 2 shipping firm Hyundai Merchant Marine, the report said.
Source : SN-TR.