MANILA, Philippines — Chinese companies are interested in investing in the operations of the Philippine unit of South Korea's Hanjin Heavy Industries and Construction, which recently declared bankruptcy after it defaulted on over $400 million in bank loans.
Hanjin Philippines early this week filed for court rehabilitation proceedings as it struggles to pay $412 million in combined loans from five Philippine banks, in what could be the biggest corporate default in Philippine history. Most of the money was reportedly lent without collateral protection.
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The South Korea shipbuilder is the biggest foreign investor and top employer at the Subic Bay, a former US naval base just 124 nautical miles from Scarborough Shoal, a disputed area of the South China Sea.
In a press conference Friday, Trade Undersecretary and Board of Investments managing head Ceferino Rodolfo said over the past two days, the agency was in touch with two Chinese companies that have expressed interest in opportunities in shipbuilding in the country in the past and informed them of Hanjin’s situation.
He said both companies, which are operating big shipyards in China, have strong interest in investing in the operations of Hanjin.
Given Hanjin’s situation, Trade Secretary Ramon Lopez said the trade department is providing support by linking possible strategic investors with Hanjin.
“Our first objective is to replace with another shipbuilder that will take over,” he said.
Hanjin Philippines was established in 2006 as a subsidiary of South Korean shipbuilder Hanjin Heavy Industries and Construction Co. Ltd. With $2.3 billion in direct investments, the local unit started rolling out some of the biggest ships in the world at its 300-hectare Subic shipyard – from cargo to container ships, bulk carriers, LPG carriers, very large crude oil carriers and very large ore carriers.
Since 2008, Hanjin Philippines has delivered a total of 123 vessels to clients across the globe, putting the Philippines on the map as the world’s fifth largest shipbuilder.
Employing around 30,000 employees at peak season, Hanjin laid off over 7,000 workers last December, and plans to terminate another 3,000 early this year, keeping just about 300 local workers and as few as seven Korean supervisors would remain in March for facility maintenance.
According to the Bangko Sentral ng Pilipinas, the exposed banks are taking “collective” action to cover Hanjin’s default. The lenders are also reportedly considering talking to strategic investors. — with a report from The STAR