South Korean shipbuilder Hanjin Heavy Industries and Construction Philippines has filed for a voluntary rehabilitation due to ballooning financial obligations to Philippine and Korean lenders.
Subic Bay Metropolitan Authority (SBMA) said Thursday that Hanjin Philippines filed on Tuesday a petition before the Regional Trial Court in Olongapo City to initiate voluntary rehabilitation under Republic Act 10142 or “An Act Providing for the Rehabilitation or Liquidation of Financially Distressed Enterprises and Individuals.”
The SBMA Chairman Wilma Eisma said she was saddened to learn that the Korean shipbuilder—the biggest foreign investor in the Subic Bay Freeport Zone—is facing serious financial trouble.
Eisma noted that Hanjin Philippines officials revealed to the SBMA that the company has around $400 million in outstanding loans from Philippine banks on top of another $900 million in debts owed to South Korea lenders.
She was told that the company still has six pending multi-million new ship-building projects at its Redondo Peninsula shipyard in Subic and that these may have to be canceled 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.
“It’s really sad that Hanjin would be in dire financial straits after successfully building some of the world’s biggest ships here and putting the Philippines on the map as the world’s fifth largest shipbuilder,” she said.
Hanjin Philippines was established in 2006 as a subsidiary of Hanjin Heavy Industries & Construction Co. Ltd., a multi-national company that provides shipbuilding, construction, and plant services in South Korea and internationally.
With some $2.3 billion in foreign direct investments in the Philippines, the SBM said the firm proceeded to manufacture some of the world’s biggest cargo and container ships, bulk carriers, liquefied petroleum gas carriers, very large crude oil carriers, and very large ore carriers.
Citing company records, SBMA said Hanjin Philippines has delivered 123 vessels to valued clients across the globe since 2008, thus cementing its foothold in the highly competitive shipbuilding market.
In the course of its operation, the company became the biggest employer among all registered businesses in the Subic Bay Freeport Zone with some 30,000 employees during its peak, and was recognized by both the Philippine Exporter Foundation (Philexport) and the Department of Trade and Industry (DTI) as top export performer, according to the SBMA.
“However, in face of recent liquidity problem, Hanjin Philippines has laid off more than 7,000 workers last December,” Eisma said.
The firm is about to lay off another 3,000 early this year until its workforce is reduced to just about 300 local workers and as few as seven Korean supervisors by March to do facility maintenance, she added.
“The SBMA, of course, expressed its concern about the separation of shipyard workers, but we received assurances that those who were laid off were amply compensated. Still, we’re having this aspect checked out,” Eisma said.
SBMA is now working with Hanjin officials to find ways to keep the shipbuilder afloat, which has helped build Subic’s reputation in the global maritime industry.
“I really hope that Hajin’s creditors would agree to some rehabilitation plan, or that the company would find some financial partner to continue with its shipbuilding operations in Subic,” Eisma said. —Ted Cordero/VDS, GMA News