Philippine shipping sees little effect from Hanjin crisis; Hanjin recovery 'uncertain' – Fitch Ratings

PH shipping sees little effect from Hanjin crisis
GENIVI FACTAO January 15, 2019 https://www.manilatimes.net/ph-shipping-sees-little-effect-from-hanjin-c...

Stakeholders and leaders in the maritime industry downplayed the impact of Korean shipbuilder Hanjin Heavy Industries and Construction Philippines on the shipping industry, as the country maintains its position as the fifth largest ship-building nation.

Former Marina administrator Vicente Suazo Jr. said before Hanjin came, the Philippines is already in the global map of shipbuilding nations, thanks to Japanese shipbuilding company Tsuneishi Heavy Industries (Cebu) Inc.

He said Tsuneishi is fully booked until 2020 and will accept new orders for building starting in the early part of 2021.

“When Tsuneishi started building capesize vessels we were already the fourth largest shipbuilder. The presence of Hanjin strengthened that position,” he explained.

The market however, crashed, as there was a slump in the world market that affected the shipbuilding industry.

“Tsuneishi was able to adjust and sustain. They likewise diversified their business. Hanjin must have overexpanded their shipping business and shipbuilding when the market was slowing down and must have not anticipated it,” he said.

Other key leaders in the maritime industry who requested anonymity said highly trained workers laid off by Hanjin could find jobs in other shipyards in the country.

Industry players also see the opportunity for prospective shipbuilding companies to take over the shipyard and establish a maritime industrial park.

Last Tuesday, Hanjin, the biggest foreign investor in the Subic Bay Freeport Zone has filed a petition for voluntary rehabilitation under Republic Act 10142, otherwise known as “An Act Providing for the Rehabilitation or Liquidation of Financially Distressed Enterprises and Individuals” at the Regional Trial Court in Olongapo City.

Hanjin laid off more than 7,000 workers last December 2018 and 3,000 more workers are expected to be laid off until just about 300 local workers and seven Korean supervisors remain in the company by March for facility maintenance.

SBMA Chairman Wilma Eisma said Hanjin became the biggest employer among all registered businesses in the Subic Bay Freeport Zone with some 30,000 employees at peak season, and was recognized by both the Philippine Exporter Foundation and the Department of Trade and Industry as top export performer.

According to Eisma, Hanjin still has six pending multi-million new building projects at its Redondo Peninsula shipyard, and feared that these may have to be cancelled if a rehabilitation plan does not materialize.

“The bottom line is that the company said it does not have enough cash to repay its loans, and that it cannot continue with its operations under these circumstances,” Eisma said.

Hanjin owed some $400 million in outstanding loans from Philippine banks on top of another $900 million in debts with lenders in South Korea.

The Bangko Sentral ng Pilipinas (BSP) downplayed the impact of Hanjin’s loans to the country’s banking system, saying there’s no cause for worry, as the percentage of Hanjin’s loans to total loans were just 0.24 percent.

BSP Officer in charge and Deputy Governor Diwa Guinigundo said: “Hanjin loans were not an issue that can affect the banking system. It’s a very small one. I think though a knee-jerk reaction can come out of it but I don’t think it’s a systematic issue.”

The Bank of the Philippine Island said they have provisions for Hanjin loans. Rizal Commercial Banking Corp. said the Hanjin loan amount was very manageable. BDO Unibank Inc. also said, “it was adequately provided for potential losses.”

Hanjin recovery 'uncertain' – Fitch Ratings
Ralf Rivas January 16, 2019 https://www.rappler.com/business/221145-fitch-ratings-says-hanjin-recove...

Fitch Ratings says the rehabilitation plan for Hanjin Heavy Industries and Construction Philippines may take time to execute

MANILA, Philippines – The interest of Chinese firms in taking over Hanjin Heavy Industries and Construction Philippines and the court granting its request for corporate rehabilitation may not be enough to lift the embattled company, said debt watcher Fitch Ratings on Wednesday, January 16.

Fitch Ratings said "recoverability is uncertain," as the implementation plan for rehabilitation may take time to execute.

The debt watcher also noted that Hanjin's parent company based in South Korea failed to sell it in 2018.

The Philippine Star reported that the Olongapo City Regional Trial Court granted Hanjin's petition for receivership and placed the Korean shipbuilder under corporate rehabilitation.

Stefani Saño, a former member of the Subic Bay Metropolitan Authority board, was appointed as rehabilitation receiver.

Hanjin owes 5 local banks some $412 million, on top of its $900-million debt to South Korean lenders.

Fitch Ratings said Hanjin's problems stemmed from the "extended weakness" in the global shipping industry as well as the financial issues of its parent company.