Korea Line Corp., a subsidiary of the SM Group, has prepared the payment of the acquisition price with thorough due diligence since signing a contract for the acquisition of Hanjin Shipping's US and Asian routes. However, there are concerns that the sell-off of the assets may be cancelled as recently Hanjin Shipping's 100 billion won (US$90 million) in overseas contingent liability surfaced.
In these circumstances, the SM Group decided not to give up the acquisition of Hanjin Shipping's assets in the Americas and Asia routes. The shipping company will clarify its position about the takeover.
"We will do our best to complete the acquisition of Hanjin Shipping's human resources and assets on the Americas and Asia routes," said a high-ranking representative of Korea Line Corp. on December 18. "Former Hanjin Shipping employees are already working at Korea Line Corp. It is absurd to say that Korea Line Corp. will go back to the drawing board." In fact, 294 onshore Hanjin Shipping employees were hired as employees of Korea Line Corp. and began to work to found a new corporation on December 5. It is said that they are tackling remaining tasks related to Hanjin Shipping, too.
The Seoul Central District Court also confirmed that it was unlikely that the SM Group's acquisition of Hanjin Shipping assets will be cancelled. "The SM Group is in the process of negotiating prices as changes were made in the appraisal of assets such as foreign subsidiaries as the sell-off was push forward with in a hurry," a court official said.
However, creditors, Hyundai Merchant Marine (HMM), and the Korea Shipowners Association are paying much attention to the process, judging that there is a possibility that the SM Group will abandon taking over Hanjin Shipping's US and Asian routes.
Some claim that the SM group is wreaking havoc with the order of the shipping industry. With regard to the claim, The SM Group and Korea Line Corp. are flatly denying it, saying that it is far from true. On the contrary, they say that it is mortifying that they are being vilified even though they conceded Long Beach Terminal, one of the core assets of Hanjin Shipping's US route to HMM. "The SM Group conceded Long Beach Terminal to HMM as HMM said that they will acquire the terminal. But HMM took part in an additional bid for Long Beach Terminal through MSC, a Swiss shipping company," claimed a high-ranking representative of Korea Line Corp.
HMM said that it could not enter the bid due to its low debt ratio. Some would not believe it. It was rumored that HMM made a deal with MSC, which took part in the takeover of Long Beach Terminal, on the condition that the HMM will join the 2M, a global shipping alliance. HMM even promised MSC, a global shipping company, to make MSC the largest shareholder of Long Beach Terminal.
The two companies have not yet disclosed the specifics of the terms of the deal through which HMM will take a certain ratio of equities in the terminal after the MSC took over the terminal. It is also unclear how with what percentage they will share 300 billion won (US$270 million) in debt of Long Beach Terminal.
Since Long Beach Terminal is the largest port terminal in North America owned by a Korean shipping company, the controversy over the sale of the terminal is expected to continue for the time being.
Source: Business Korea
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