Chairperson Choi Eun-young of Hanjin Shipping Co. has decided to turn over the company’s major areas of operation including the container shipping, bulk shipping, and harbor terminal operations to Hanjin Group and step down from managing the shipping firm, sources said on Feb. 5.
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President Suk Tae-soo of Hanjin Shipping Co.
(Photo:Hanjin Shipping:article by SKL)
She is the widow of the late Chairman Cho Soo-ho, who died in 2006, and she took over her late husband’s position as chairman of the shipping company the same year. But Chairman Cho named Suk Tae-soo, president of Hanjin-KAL Holdings, who is very close to him, to be president of Hanjin Shipping following the provision of funds to the shipping firm to keep it going financially last year.
The sources said the chairwoman has been in negotiations with Chairman Cho to turn over the shipping firm in return for a stake in Hanjin-KAL Holdings. She wants to split the holding company and have Chairman Cho take over the new company.
Hanjin Group, on the other hand, may integrate the new company and Hanjin Shipping and participate in the issuance of 400 billion won worth of new shares for the shipping company before making the shipping firm into an affiliate of Korean Air. The matter will be settled when Chairman Cho returns from his trip to the United States soon, the sources said.
Chairperson Choi plans to keep the remaining part of the shipping firm under her control after the merger with the new holding company to be set up. She will keep running the third-party logistics operation, the building owned by Hanjin Shipping in Yeouido, Seoul, Cyberlogitech, an IT affiliate, and Hanjin SM, a shipping management company, the financial sources said. The third-party logistics operation is a home delivery operation taking care of goods from manufacturers to the consumers or sellers, which recorded 400 billion won in annual revenue in 2013.
Hanjin Shipping recorded total revenue of 10.337 trillion won in 2013 with container and bulk carrier operations taking up 82 percent and 13 percent of total turnover respectively.
Hanjin Shipping has been mired in operational troubles since the global financial crisis due to reduced cargoes and decreases in shipping charges, incurring a loss of 242.4 billion won last year in operating profit and a net loss of 638 billion won.
Chairperson Choi has decided to turn over the management of Hanjin Shipping to Hanjin Group, as she always said saving the company is of first and foremost importance to her, sources close to her said.
Hanjin Group’s taking control of the shipping firm has been predicted for some time with the shipping firm in serious financial trouble. Chairman Cho provided substantial funding at the end of last year to the shipping firm through Korean Air, with the shipping firm as collateral. Korean Air provided a total of 250 billion won to the shipping affiliate twice, once in October and again in December, boosting its debt ratio to 806 percent at the end of the third quarter of 2013. Chairman Cho also brought in President Suk Tae-soo of Hanjin Transportation, who is very close to him, as the CEO of the shipping firm at the end of last November.
Sources at Korean Air said Chairman Cho has been very determined in his attempt to save the shipping firm like his late father who founded the company for the wellbeing of Korea for patriotic reasons by engaging in all modes of transportation, including maritime shipping, air, and land transportation.
The share prices of Hanjin Shipping and Hanjin Holdings jumped on Feb. 5 by 6.73 percent and 8.91 percent respectively with the news that Chairwoman Choi has decided to turn over the shipping company to Hanjin Group. Korean Air’s share price also jumped 3.78 percent with the stock market taking the news as good.
