Sinking Hanjin stocks volatile after trading resumes

Shares in South Korea's foundering shipping giant Hanjin were volatile Monday after it filed for bankruptcy protection in Seoul and the US, rocking the troubled maritime freight industry.

Hanjin, the world's seventh and South Korea's largest shipping firm sought court protection after creditors rejected its latest plan for dealing with a hulking $5.37 billion debt.

Hanjin's bankruptcy would be by far the largest in the history of container-shipping, which is suffering from its worst downturn in six decades.

Holed beneath the waterline by slumping global trade and slowing growth in China, more than half of its fleet -- 79 vessels -- is either stuck in port or unable to dock, with authorities fretting the company will not be able to pay its bills.

South Korean regulators allowed share trading to be resumed Monday after Hanjin's court receivership was granted, but the share price plummeted by the daily limit of 30 percent shortly after the market opened.

The issue recovered to be just 1.6 percent lower at one point but soon fell back and ended at 1,070 won (97 cents), down 13.7 percent. The stock is now more than 40 percent off from a month ago and 80 percent down over the year.

Seoul-listed Hyundai Merchant Marine -- which could buy some of its rival's assests -- fell 3.6 percent.

Under the receivership, the court will review the firm's financial conditions and a revival plan to decide whether to put it under a court-led recovery programme or to declare it bankrupt. 

Hanjin is required to submit its plan by November 25. 

The company also filed for bankruptcy protection in the US Friday to protect its vessels from being seized by creditors. 

If the filing is recognised, the court will block creditors in the US from seizing the company’s assets or launching other legal actions while its other bankruptcy proceedings are under way.

- "Black Friday coming" -

Nearly 80 Hanjin vessels have been either seized or denied cargo handling or docking at ports in countries including the US, China, Japan, Spain and Canada, South Korea's government said Monday. 

Hanjin is seeking stay orders in 43 countries to protect its vessels from being seized with applications in 10 more to be made this week, an official from Seoul's financial regulator said Monday.

An estimated 540,000 containers are expected to face delivery delays, according to media reports, raising concerns over delivery of goods ahead of Thanksgiving and Christmas holiday shopping in the US. 

Cho Sung-Jin, head of LG Electronics' home appliance unit, described the situation "worrisome," saying LG was desperately searching for other firms to ship its refrigerators, TVs and air conditioners.  

"Black Friday is coming soon...I'm not sure if we can cover demand with our current inventory in the US," he said, adding that he was worried about a potential hike in shipping costs. 

Hanjin has struggled for years as it failed to recover from the impact of the 2008 global financial crisis.

It posted a net loss of more than 473 billion won in the first half of this year alone, after racking up total net losses of about 1.2 trillion won over the past three years. 

Source: AFP