By In-Soo Nam

SEOUL -- Hyundai Merchant Marine Co. and four other shipping groups submitted preliminary bids for the assets of Hanjin Shipping Co.'s Asia-U.S. route, as Hanjin is broken up as part of a restructuring plan.

The five bidders now have until Nov. 4 to review the assets, which include the vessels that operate on the trans-Pacific route.

"We hope Hanjin assets will help enhance our competitiveness on major routes," Hyundai Merchant, a major South Korean shipping line, said. It said it would decide whether to make a final takeover proposal after it completes due diligence.

A judge at the Seoul Central District Court, which is handling Hanjin's insolvency proceedings, confirmed the five bids, but declined to identify the bidders.

A couple of entities have announced their intent to pursue the Hanjin assets. Korea Line Corp., a global operator of dry bulkers and liquefied-natural-gas carriers, said in a filing that it had submitted a bid. The Korea Shipowners' Association, which represents dozens of shipowners and operators, said it had as well.

Samil PricewaterhouseCoopers, which is managing the asset sale, said it would accept final bids until Nov. 7, with a view to signing a sale agreement by the middle of the month.

The sale process may herald the beginning of the end of Hanjin, which is going through court-led bankruptcy proceedings. It filed for receivership in late August, disrupting supply chains around the world.

Hyundai Merchant, which is owned by state-owned Korea Development Bank, is trying to compete with bigger rivals such asDenmark's Maersk Line and Geneva-based Mediterranean Shipping Co. on the route, one of Asia's main links to Western markets.

The Korean government has said it would back Hyundai in buying Hanjin assets, provided the purchase would help it stay competitive. But analysts said it is doubtful whether Hyundai will actually go through with the acquisition, as its Asia-U.S. operations substantially overlap Hanjin's.

Duplicated networks and redundant vessels would only exacerbate the industry's travails, marked by charter hires of container ships at historic lows and idle-vessel capacity near an all-time high, shipping-industry monitor Alphaliner said in a recent report,

Hanjin, once the world's seventh-largest container operator by capacity, is under a court order to sell its own ships and return chartered ships to their owners. Germany's HSH Nordbank AG said Thursday it would take over nine Hanjin container ships whose purchase it financed and lease them to Maersk Line and Mediterranean Shipping, the world's two biggest container-shipping operators.

The nine ships, worth around $90 million each, are among the best in the Hanjin fleet, and their loss is a strong indication that the company won't return to its former status as a global carrier.

Hanjin said on Monday that it would close its 10 European offices, including its regional headquarters in Germany. Separately, the company is in talks with MSC to sell its stake in the Long Beach Terminal in California.

The Korean company, whose debt totals around 6.03 trillion won ($5.3 billion), also plans to reduce its land-based workforce of 700 by nearly 60%.

Write to In-Soo Nam at In-Soo.Nam@wsj.com

(END) Dow Jones Newswires

October 29, 2016 02:48 ET (06:48 GMT)

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