Friday, February 20, 2009
Seoul: In yesterday’s emergency economy meeting presided over by President Lee Myung-bak, the shipping industry emerged as the next target after the construction and shipbuilding industries, where government-supervised and creditor-led restructuring efforts have already begun, local media reported.
The government is considering debt rescheduling for the shipping industry, as the industry’s profitability deteriorates along with worldwide trade volume in the aftermath of the global financial crisis.
Late last year, Park Road Corp., a midsize shipping company, went bankrupt. Samsun Logix, another midsize shipping company, applied for court receivership early this month. The nation’s top four shipping firms - Hyundai Merchant Marine Co., Hanjin Shipping Co., STX Pan Ocean Shipping Co. and Korea Line Corp. - are also seeing their net profit decline.
The Ministry of Land, Transport and Maritime Affairs and the Financial Services Commission announced they are discussing details for the industry’s eventual overhaul.
“We are deliberating on whether to arrange restructuring in the shipping industry in the same way that we did in the construction and shipbuilding industries or to take other routes,” said Chin Dong-soo, chairman of the Financial Services Commission.
A ministry official who refused to be identified said, “Even if a builder is restructured [and is forced to sell the apartments it has been building], the apartments will still be in Korea. But if a shipping company is restructured, in many cases, it will have to sell the ships to foreign companies at dirt-cheap prices.”
“The government should take into account these unique characteristics,” the official added. The government announced it would conduct a follow-up study on a second group of 94 midsize builders and four newly-established shipbuilders, in the aftermath of a recent credit risk study and corporate restructuring of firms in the two industries.
Companies in industries outside those specified will have to restructure on their own with their creditors, the government said. But further industry-wide restructuring efforts are not out of the question, and guidelines decided upon by a committee of related ministries will govern any such efforts. [20/02/09]