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Loan for embattled shipper Hanjin sends stock soaring
[SEOUL] The largest shareholder in South Korea's Hanjin Shipping has agreed to provide an emergency loan to the cash-strapped firm, sending its share price soaring some 30 per cent Thursday.
The world's seventh-largest shipper is seeking bankruptcy protection at home and in the US after creditors refused to further help the firm, which is groaning under US$5.37 billion of debt.
The board of Korean Air approved a 60 billion won (S$73.58 million) loan late Wednesday - part of a 100 billion won emergency fund earlier pledged by Hanjin Group, the conglomerate that has both Hanjin Shipping and Korean Air under its wing.
Earlier, the board had refused to approve the funds for the troubled affiliate, citing difficulties in securing collateral from the company.
"The board agreed to lend the money to Hanjin Shipping, taking Hanjin Shipping's accounts receivable as collateral", a Korean Air spokesman told AFP.
Hanjin, whose collapse has sparked turmoil worldwide on the high seas, is seeing debts including charter fees mount every day, with many ships marooned at sea.
It entered court receivership earlier this month after its creditors rejected the company's 500-billion-won self-rescue plan.
To contain growing chaos in global shipping, Hanjin Group had earlier promised to offer 100 billion won to the firm - with the other 40 billion won personally offered by group chairman Cho Yang Ho.
The share price plunged 21 per cent Wednesday after news that a Seoul court had warned the shipper it must deal with daily accumulating debts or face bankruptcy.
But news of the loan sent it soaring 29.6 per cent to 1,160 won in early trade Thursday, while Korean Air was up 5.9 per cent to 34,100 won.
As many clients cancel shipping contracts and dock operators refuse to handle cargos for the crippled firm, the Seoul court on Monday told Hanjin to return its chartered vessels to save charter fees.
Under the Seoul court receivership, Hanjin must submit a business revival plan by Nov 25 before it decides whether to put it under a recovery programme or declare it bankrupt.
Of its fleet of 141 ships, Hanjin has returned 37 chartered ships to their owners since it entered receivership.