Korea Lines receives DIP financing

Korea Lines raised the possibility for disposal though they finally received Debt in Possession (DIP) financing.

Korea Lines announced the company received USD 85 million of DIP financing from SC Lowy Financial Services, an Irish investment company.

DIP financing is a special form of financing provided for companies in financial distress or under Chapter 11 bankruptcy process. Usually, this debt is considered senior to all other debt, equity, and any other securities issued by a company. It gives a troubled company a new start, albeit under strict conditions.

The Korean carrier could carry forward a plan for cancellation of contracts. The company will cancel some contracts for 53 chartered vessels using the capital.

Meanwhile, 5 companies have submitted letters of intent to take over Korea Lines. The due diligence for the buyout began Jan. 3rd and bidding set to start from Jan. 21st. < 김보람 기자 brkim@ksg.co.kr >