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SK Group plans to sell off shipping arm

Oct 02,2018
SK Group plans to sell SK Shipping to local private equity fund Hahn & Company, the group confirmed on Monday.

The group has been looking for a new owner for its shipping affiliate as it suffers from losses and heavy debt from the slump in the global shipping market.

SK Shipping’s debt-to-equity ratio hit 2,391 percent as of June, and its debt totaled 4.4 trillion won ($3.96 billion).

A spokesperson from the conglomerate said the talk has not been finalized yet, but it has been negotiating with Hahn & Company.

The private equity fund is considering purchasing newly-issued SK Shipping stocks.

Sources from the investment banking industry speculate the local private equity fund will purchase roughly 1.5 trillion won of stocks issued by SK Shipping.

This would be around 80 percent of the company, so Hahn & Company would become the controlling stakeholder.

If the deal is signed, SK Group would pull out of the shipping industry it entered 36 years ago.

The group established the shipping line in 1982 to enable stable delivery of crude oil to SK Energy.

The shipping line had good business through the early 2000s.

However, its business began to struggle after the global financial crisis in 2008, like many other local shipping lines.

“If SK Shipping uses all of the 1.5 trillion won to pay back debt, the company’s debt rate could fall to as low as 188 percent,” said Kim Joon-sop, an analyst from KB Securities, in a report on Monday.


BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]