SEOUL, AJU - Hanjin Heavy Industries & Construction secured approval from Philippine banks to reschedule the debt of its affiliate in Subic, two days after the mid-sized South Korean shipbuilder reported capital impairment.
Philippine creditors agreed to acquire Hanjin Heavy shares in return for solving surely obligations. Hanjin said the deal would be submitted to a Philippine court by the end of this month. HHIC-Phil, a debt-stricken shipyard in Subic, has applied for a rehabilitation program.
Hanjin Heavy reported impaired capital this week as its consolidated financial statement for 2018 reflected losses in HHIC-Phil. The shipbuilder plans to resolve capital impairment and improve its financial structure through a debt-for-equity swap with South Korean creditors.
Korea Development Bank (KDB) attributed Hanjin Heavy’s capital impairment to the realization of $410 million in guarantee liability for the local financing of HHIC-Phil. The state policy lender said that domestic and overseas creditors will be able to rescue the Subic shipyard through capital expansion if negotiations are successful.
Hanjin Heavy is South Korea’s oldest shipyard founded in 1937. Like other South Korean shipbuilders, the Hanjin shipyard has been kept afloat with money from creditors under a government-led restructuring program. In 2016, Hanjin Heavy received a bailout of 250 billion won.