Shipping operator Korea Line Corp. has won the bidding for some assets of bankrupt Hanjin Shipping Co., whose collapse in late August stranded billions of dollars in cargo at sea, disrupting supply chains worldwide.
In a surprise decision, a Seoul court on Monday awarded Korea Line, a midsize bulk-shipping operator, the first right to purchase the assets of Hanjin’s Asia-U.S. route, as well as its stake in a California terminal.
A judge at the Seoul Central District Court, which is handling Hanjin’s insolvency proceedings, said it chose Korea Line over Hyundai Merchant Marine Co., which had been expected to win. Hyundai Merchant was backed by senior government officials and its main creditors, which said they would promote the company as the country’s largest oceangoing carrier. Final sale documents will be signed Nov. 21, according to the court.
“Korea Line proposed better terms, including higher prices,” the judge said. “It also offered to take over more Hanjin employees.”
“This is unexpected,” said Rahul Kapoor, a director at Drewry Financial Research Services Ltd. in Singapore. “It comes down to price. For the court, it was the price because they need to repay debt.”
Korea Line Corp., a South Korean shipping company that filed for bankruptcy protection five years ago, offered better terms in its bid, including taking on all employees, the court spokesman said in the text message, without elaborating. Also included in the bid was Korea Line’s interest to buy Hanjin’s 54 percent stake in a port terminal in Long Beach, California and some of Hanjin’s vessels.
“Rather than focusing on competition and reckless expansion, the company will focus on profitability and rebuilding customer confidence,” Korea Line said in a statement Monday. It will use cash generated internally to purchase Hanjin’s local offices in Asia, the U.S., staff and logistics systems, it said.
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