Hanjin Shipping, which last week announced a "financial improvement plan,"
said it will raise 300 billion Korean won (KRW) ($283 million) by spinning off its dedicated bulk business into a joint venture.
Hanjin Shipping will be establishing a joint venture with Hahn & Company, a private equity firm, which will take over shares worth KRW 300 billion and simultaneously invest KRW 100 billion in the joint venture. Meanwhile, Hanjin Shipping will be contributing 36 vessels, including 7 LNG ships.
Hahn & Company will be taking over 76 percent of the total shares and Hanjin Shipping will have 24 percent. Hanjin Shipping will be handing over the company’s dedicated service for POSCO (formerly Pohang Iron and Steel Company), Korean Electric Power Co., the logistics company GLOVIS and the Korean Gas Company along with all the assets, debts and contracts involved. Hahn & Company and Hanjin Shipping will be signing a main contract Thursday, with the launch of a joint venture scheduled early April of 2014.
With this deal, Hanjin Shipping will be securing KRW 300 billion as well as transferring finances and debts of KRW 1.4 trillion to the joint venture. Hanjin Shipping will be able to reduce its debt and improve balance sheets with additional liquidity.
Once this joint venture is launched, Hanjin Shipping’s debt ratio will be lowered from 987 percent (as of September, 2013) to 673 percent.
Hanjin Shipping commented that the company will fully cooperate in sales, ship/crew management and additional practices in order to stabilize this new joint venture.
According to Asian Venture Capital Journal
, Hahn & Company is a South Korea-focused private equity firm founded in 2010 by Scott Hahn, formerly Morgan Stanley Private Equity Asia’s chief investment officer.