Korea had announced S1.2 billion fund to assist the country’s struggling shipping and shipbuilding companies. The fund is available only to companies with debt-to-equity ratios below 400 percent. In announcing the fund South Korea’s minister of strategy and finance, Choi Kyung-hwan, said the fund is meant to assist the reorganization efforts of struggling companies.
Choi said corporate restructuring efforts aimed at bolstering South Korea’s overall competitiveness should entail pain-sharing by all interested parties. But Hanjin Shipping has a debt ratio of 687 percent and Hyundai Merchant Marine, 980 percent.
If the shipping companies can bring debt ratios to 400 percent and below, this US$1.2 billion fund will help them to place ship orders. However, the current debt levels of South Korea’s two largest container ship lines would make it almost impossible for them to tap the fund. Both the lines have been selling assets to bolster liquidity in the face of losses.
Source: Business Korea