Hanjin Heavy Industries & Construction (HHIC) announced on December 8, to the Korean Exchange, that its affiliate yard in the Philippines has filed for a rehabilitation procedure.
According to local sources, the Philippine court will make its decision within 120 days whether to pull HHIC-Phil Inc., which operates the Subic yard, under or allow it to proceed with the rehabilitation scheme under a court receivership.
The Subic shipyard’s assets were valued at 1.84 trillion won (US$1.63 billion) as of the end of 2017, accounting for 43.75 % of Hanjin Heavy’s consolidated assets.
The downturn of the global shipbuilding industry has hit HHIC-Phil hard as it saw newbuilding orders shrank since 2016.
Hanjin Heavy filed for its Subic shipyard’s rehabilitation program with the Philippine court in order to prevent the poor performance of the Philippine affiliate from affecting the parent company in Korea.
In 2006, Hanjin Heavy built the Subic shipyard in the Philippines. The company built small special ships at the Youngdo shipyard in Korea and mid-size and large merchant ships at the Subic shipyard.
Yet, its actual output dropped from 1,161,618 GT in 2016 to 418,444 GT during the Q3 of 2018 and the rate of operation also plunged from 77.4 percent to 27.9 percent over the same period.