Good news for Hanjin Shipping sailors running low on food and water out at sea.
Korean Air Lines, Hanjin’s biggest shareholder, agreed to lend roughly $53.96 million to the troubled South Korea company, the Wall Street Journal reported. The state-run Korea Development Bank said it would lend up to $45 million to the shipping giant as well. The news sent Hanjin shares up 29% on the Korean Exchange during trading Thursday.
The combined $99 million in funding will help resolve at least some gridlocks around the world between Hanjin and docking ports. Dozens of company cargo ships were stranded after Hanjin filed for bankruptcy protection on Aug. 31 amid a recent downturn in global trade and glut of container ships. Ports and unloading services around the world barred Hanjin from docking out of worry they wouldn’t get paid.
The loan will be a relief not only for investors, ports, and stranded Hanjin employees, but also tech companies and U.S. retailers hoping to stock its stores for the holiday season. The lockup has already caused a container shortage in the U.S., while Samsung and HP (HPE) say electronics and parts worth millions are now stuck at sea.
Korean Air Lines’ credit line comes as part of a pledge from Hanjin’s parent company to secure at least $90.46 million—including $35.9 million of Hanjin Group chairman Cho Yang-ho’s personal wealth—to help resolve the cargo stalemate.
Still, Hanjin’s current level of funding falls short of the $245 million South Korean courts say it needs to unload cargo at all ports. Hanjin has already finished unloading some 97 ships, while 32 are still stranded at sea.
Overall, the stock is down 68% year-to-date.
While investors cheered the news of the Korean Air loan, Hanjin’s former chairwoman, Choi Eun-young, is now under investigation for selling her stake in the shipping company in April—months before its woes began, according to regulatory filings seen by the Journal.
Choi and her two adult daughters sold over 960,000 shares valued at $2.7 million, according to the filings—saving at least $1 million in losses had she and her family stood by the stock as Hanjin filed for bankruptcy protection.
Now, South Korea’s Financial Services Commission suspects Choi, who stepped down in 2014, had insider information when she and her daughters decided to liquidate their shares. The Commission has initiated a probe regarding Choi, who has defended her trades, saying she sold her stake to pay off personal debt and was not aware of an impending bankruptcy.
