Hanjin Shipping plans new business entity with parent firm

Hanjin Shipping Holdings is spinning off its shipping and brand management businesses and allowing Hanjin Shipping to merge with these businesses for a newly established entity. Meanwhile, the remaining businesses of 3PL, Hanjin Ship Management, CyberLogitec and real estate business will stay with the parent firm.

The proposed move is expected to enhance shareholder value through greater management efficiency, Seoul-listed Hanjin Shipping announced in a regulatory disclosure.

The new business move is expected to be completed by 1 June if approved by shareholders at a meeting on 29 April.

The South Korean shipping firm had recorded a 2013 net loss of KRW680.2bn ($630.2m) due largely to low freight rates amid the oversupplied container shipping market.

The parent firm however generated a net gain of KRW17.5bn last year, reversing from a deficit of KRW215.6bn in 2012.

Hanjin Shipping Holdings, which is also listed in Seoul, owns 36.5% stake in Hanjin Shipping. Korean Air is the largest stakeholder in Hanjin Shipping Holdings with a 16.7% ownership.

In October 2013, Korean Air injected KRW150bn of funds into Hanjin Shipping to help the troubled shipowner deal with its liquidity problems.

Hanjin Shipping has said it is working on various measures to improve liquidity and strengthen its balance sheets.

The shipowner also had a change of leadership on 1 December 2013 with Tai Soo Suk taking over as president and ceo. The former boss Young Min Kim had resigned in November last year to take responsibility for the company's continuing losses and delay on financial support from major creditor banks.