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”Progress of Hanjin Shipping’s VRA”

July 5, 2016

 

 
Dear Sirs,

 

 
First, please accept our sincere apologies for causing concern to you because of the various media reports regarding Hanjin Shipping’s voluntary restructuring agreement.

 

 
Hanjin Shipping is currently making all possible efforts to achieve business stabilization by obtaining short-term liquidity and meeting the requirements of its creditors.

 

 
1. Creditor Debt Adjustment

Hanjin Shipping been summoned at two Creditors’ meetings, on May 19th and June 17th, and successfully obtained the agreement by creditors to extend the due date of the public bonds issued. The total amount of extended public bonds is USD 195.3 million. Currently Hanjin Shipping’s debt readjustment process is proceeding according to plan, and we plan to finalize the process as soon as possible, through discussion with creditors regarding the conversion of investment and delay of debt repayment date of public bonds amounting to USD 395.2 million.

 

 

2. Alliance
Set-up of the operations organization for ‘THE Alliance’ has been finalized at a meeting in Singapore, held in May. Hanjin Shipping is actively participating in the preparation process for ‘THE Alliance’ as a main player.
We are now in close discussion with our new alliance partners in order to set-up new joint services, and plan to finalize this process by end of September.
So far, competition authorities in Malaysia, Korea, China, Japan and numerous others have approved ‘THE Alliance’ to be compliant with their respective competition laws, and we are going to apply to the Federal Marine Commission (FMC) with the services features of THE Alliance for next year for approval. Overall, preparations for ‘THE Alliance’ are going smoothly, and Hanjin Shipping is putting in our best efforts in coordination with ‘THE Alliance’ members to in order to provide stable and competitive services to our valued customers

 

 

3. Charter Rate Negotiation
Hanjin Shipping is in the process of negotiating charter rate with 22 ship-owners. After the formation of charter team in the beginning of May, the first round of talks explaining the necessity of reducing charter rates have concluded, sharing the problem with the ship-owners regarding charter rate adjustment and payment delay. Individual negotiation is under progress with the target of adjusting the charter cost of USD 2,249.3M (2.2Bil.), the amount that needs to be paid for the next 3 years and 6 months, to 30% and the plan is to conclude this negotiation by beginning of August.

 

 

4. Operating Funds
It is true that there were some payment delay to our operation vendors , but we manage to sort out problems with the vendors so far. Thus, we can inform our customers that our service will be provided without any problem.
Since the VRA, Hanjin Shipping has achieved 43% from the proposed debt restructuring plan and expecting to secure USD 151.4M additionally through liquidation of TTI (Total Terminals International, LLC), HPC (Hanjin Pacific Corp.) and ODCY in China, and also by obtaining liquidity from Terminal assets.
Additionally, the final decision has made on June 24th, to transfer business rights of 8 Intra-Asia service lanes over to Hanjin Transportation Co., which is about 12% of our Intra Asia business.
Apart from this, we expect Hanjin Group to finalize funding support with Korea Development Bank soon.
With given opportunity, here to express our gratitude towards Hanjin Shipping during this difficult time, and would ask for your continuous support. Hanjin Shipping can promise that we will provide the best service to our customers by successfully achieving business stabilization with the efforts of our staffs

 

 

Dear valued customer,
– As mentioned above, Hanjin Shipping has achieved 43% from the proposed debt restructuring plan and expecting to secure USD 151.4M additionally through liquidation of TTI (Total Terminals International, LLC) and HPC (Hanjin Pacific Corp.), share sell of China ODCY, and also by obtaining liquidity from Terminal assets. Additionally, the final decision has been made on June 24th, to transfer the Intra-Asia business over to Hanjin Transportation Co., LTD. on 8 out of all lanes such as Intra Asia, South East Asia, Korea-China/Korea-Japan lane, which we expect to secure USD 53.8Mil.

 

 
– Hanjin Group is supporting Hanjin shipping now in order to get through the tough situation and we expect situation would improve by July.

 

 
– There were some payment delay to few vendors, we can inform our customers that our service will be provided with no further problem and our financial status would be health by July.

 

 
– Hanjin Shipping is in the process of negotiating charter rate with 22 ship-owners which to be held in early Aug and expect successful outcome.

 

 
– Thanks to our valued customers’ supports, our forecasts on PSW, AWE, NE lanes from JUL are projecting almost full ships.

 

 
– In regards to upcoming 2nd half estimate volume, HJS will provide full support to meet your demands.

 

 
For your easy reference, we are adding additional information regarding the status of our asset sales.

 

 

 

 

Thanks for your kind attention and understanding.
Yours faithfully,
Hanjin Shipping / Chief Marketing Officer / Vice President
H. K. (Justin) Lee