Lenders of Hanjin Heavy Industries & Construction, a financially-troubled mid-sized shipbuilder in South Korea, will obtain majority control of the company following the newly announced debt-to-equity-swap.Under the new transaction, Hanjin Heavy’s debt of KRW 687.41 billion (USD 608.3 million) will be transformed into new shares, the shipbuilder confirmed in a stock exchange filing.
A group of creditors has agreed to accept Hanjin’s shares, according to state lender Korea Development Bank (KDB).
As a result of the agreement, creditors will hold about 84 percent of Hanjin Heavy’s stock.
What is more, lenders have selected Lee Byung-mo, a professor at Korean Inha University, to take over the management of the shipbuilder.
The new agreement will encompass debts Hanjin Heavy owes to financial institutions in the Philippines. These debts are related to projects at Hanjin Heavy Industries and Construction Philippines (HHIC-Phil), a Philippine-based shipbuilding brand of Hanjin Heavy.
HHIC-Phil was negatively impacted by the weakness of the global shipbuilding industry and the financial troubles of its Korean parent. The shipyard had to deal with dwindling orders and resorted to massive workforce cuts, laying off over 7,000 people back in December 2018. It also filed for court receivership in January this year and had been on the search for a buyer.
As World Maritime News reported earlier, investors such as companies from China as well as the Philippine Navy, are said to be interested in acquiring the yard.