By Kyunghee Park

(Bloomberg) — Seaspan Corp., a container ship-leasing firm, stated it received’t settle for Hanjin Shipping Co.’s request for a lower in constitution charges by about 30 p.c, dealing a blow to efforts by South Korea’s greatest liner to revamp debt amid a protracted commerce hunch.

The Hong Kong-based ship lessor might as an alternative contemplate ordering new, fuel-efficient vessels from a South Korean shipyard and leasing them to Hanjin Shipping, serving to enhance the liner’s competitiveness, stated Gerry Wang, Seaspan’s chief government officer. Hanjin Shipping operates seven container vessels leased from Seaspan.

“We do not accept any rate cut,” Wang stated in a cellphone interview Thursday. “We have never done it. We won’t tolerate a contract re-negotiation. Any call for rate cut is illegal by international laws.”

Hanjin Shipping is in talks with shipowners to scale back constitution charges as a part of a requirement by collectors in alternate for funds to enhance its financials. The South Korean authorities is reviewing varied measures, together with doable mergers, to revive an trade fighting mounting debt after years of losses from weak demand.

Visible Result

Hanjin Shipping is having “continuous discussion with Seaspan” and making all “effort to bring the best visible result as soon as possible,” the Korean firm stated in an e-mailed response to a request for remark.

The Seoul-based firm is in talks to decrease charges for 60 container and bulk ships it has leased from 22 house owners by some 30 p.c for a interval of about three-and-a-half years, the South Korean firm stated in a June 14 regulatory submitting. Hanjin Shipping can be assembly with its bondholders Friday to influence them to participate within the restructuring plan led by the creditor banks.

“This increases the uncertainties of the restructuring plan,” stated Park Moo Hyun, an analyst at Hana Daetoo Securities Co. in Seoul. “Fundamentally, Hanjin Shipping needs more efficient vessels if it really wants to remain competitive.”

Shares of Hanjin Shipping fell 2.7 p.c to 2,140 received as of two:08 p.m. in Seoul, extending their hunch this yr to 41 p.c, versus a 0.5 p.c decline within the benchmark Kospi index.

Durable Solution

Wang stated he met with Hanjin Group Chairman Cho Yang Ho this week. Discussions centered round a long-term answer for the transport firm, which is to have a contemporary fleet that will likely be value environment friendly, Wang stated. Seaspan has ordered container ships from South Korean shipyards, together with Hyundai Heavy Industries Co. and Samsung Heavy Industries Co., value a mixed $8 billion.

“We lived up to all the contractual obligations 100%,” even through the troublesome instances by means of the worldwide monetary disaster, Wang stated, referring to the shipbuilding orders positioned with South Korean shipyards.

Hyundai Merchant Marine Co., the nation’s second-biggest container liner, reached agreements to chop constitution charges for 3 and a half years in alternate for brand spanking new shares and debt for the adjustment.

Active Steps

Hanjin Shipping has been unprofitable in 4 of the previous 5 years. The firm’s money readily available fell 56 p.c from a yr earlier to 241 billion received ($206 million) on the finish of final yr, based on knowledge compiled by Bloomberg.

South Korea has been taking extra lively steps to assist its transport companies lower debt and climate the hunch that has led some cargo carriers to report losses or smaller earnings. Worldwide, transport firms have been shrinking their workforce and exploring consolidation after years of overcapacity depressed freight charges.

Seaspan at present has an working fleet of 89 vessels, based on its web site. It’s clients embrace Maersk Line, Hapag-Lloyd AG and Cosco Container Lines Co.

© 2016 Bloomberg L.P