South Korea's large family-owned business conglomerate SK Group is planning to get out of shipping by offloading shipping subsidiary SK Shipping Co., on account of the debt burden amid an industry slowdown.
According to a report in the Pulse, SK Holdings Co., the holding entity of SK Group, is reportedly seeking to sell a majority of its stake in SK Shipping to local private equity firm Hahn & Co. for an estimated 1.5 trillion won ($1.3 billion).
Hahn & Company is said to be reviewing a method of buying up new shares issued by SK Shipping.
An official at SK Group confirmed that they are talking to Hahn & Company regarding the issue, but nothing has been finalized yet. According to him, various methods of attracting investment for SK Shipping are currently under consideration.
Local media reported that worsening financial conditions of the unit and the government’s regulations on intra-affiliate transactions by large business groups promptted the group to shed its shipping business.
SK Shipping was founded in 1982 as Yukong Shipping. The shipping line was once the nation’s fourth largest container shipper following now-defunct Hanjin Shipping, Hyundai Merchant Marine and STX Pan Ocean during the industry boom until the mid-2000s.
However, its financial conditions deteriorated due to a large-scale loan after the global financial crisis. Having been directly affected by the slump in the shipping industry, the company’s debt ratio was 2,391 percent as of June, with over 4.4 trillion won owing in debts.