Business

Shares of troubled shipping firm Hanjin jump 28%

A train carries shipping containers from Hanjin Image copyright Getty Images

Shares of Hanjin Shipping have jumped by as much as 28% in South Korea.

That's after the board at Korean Air Lines - Hanjin's biggest shareholder - approved a loan of 60bn Korean won ($54m; £41.5m) for the troubled shipping firm.

The airline says the funds will be provided as soon as "the necessary procedure is completed", without elaborating further.

Hanjin Shipping had sought bankruptcy protection earlier this month.

The troubled firm was saddled with debts of more than $5bn. Previous attempts to raise fresh funding had failed.

Korean Air was up almost 6% in early trade.

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Estimates from the South Korean government have shown the company needs at least 600bn won to cover unpaid costs such as fuel and cargo handling.

Earlier this month parent company Hanjin Group said it would inject 100bn won in fresh funds to resolve the disruptions to the cargo transport currently stuck at sea. That includes a 40bn injection from the private funds of Chairman Cho Yang-ho.

Image copyright Getty Images

Hanjin needs to submit a rehabilitation plan in December, and the firm's creditors will need to agree on that plan.

The shipping firm has been granted stay orders to protect its ships from seizure in various ports including South Korea, the United States and Japan. But dozens of other ships are anchored off ports while the company tries to secure funds to unload cargo.

Korean Air Lines has a 33.2% stake in Hanjin Shipping. A host of other shareholders have a less than 1% stake, and they include fund managers such as BlackRock Fund Advisors and Northern Trust Investments, Inc.

Hanjin is the world's seventh-largest container line and has been unprofitable for four of the past five years.

The global economic downturn in recent years has affected profits across the cargo shipping industry.

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