HANJIN HEAVY INDUSTRIES

- HANJIN Heavy Industries and Construction (HHIC)’s Yeongdo Shipyard also speeds up normalizing its business by signing letter of intent to build USD 300 million Offshore Supply Vessel (OSV)

Lately, HHIC has been very aggressive to win the battle for bids.

HHIC’s Subic Shipyard has recently won the bid to build 6,800TEU container ships for Technomar, a shipping company based in Greece.

In addition, the first shipbuilding company in Korea has signed an agreement to build 38,000 CBT LPG carriers with Exmar. Because HHIC has
so far built carrier ships, tankers and bulk carriers only, building a gas carrier is a significant move.

The total amount of bids earned by HHIC so far reaches up to US 600 million dollars (options included, 12 vessels). These ships will be built in
Subic Shipyard and delivered in order starting 2015.

In particular, recently contracted container ships are high-efficiency and high-performance, 2nd-generation economical vessels whose fuel
consumption can be reduced by 5-7%, compared to the ships contracted in 2011. In addition, they are environment-friendly because
LNG, LPG and heavy oil can be used as fuel.

Moreover, it’s been reported that HHIC exercised its option for additional shipbuilding regarding 9,000TEU container ships ordered by NSC in
Germany. In addition, a deal on four 180,000T bulk carriers with another European shipping company is under way.

After solving all labor problems recently, the Yeongdo Shipyard has signed a LOI for building OSVs with a European shipbuilding company. Let’s wait and see if it could eventually win this bid for the first time in five (5) years.
 
The labor union has also been very supportive by sending a letter of appeal to the shipping company and asking for
help to related industries to help the Company to win the bid to build 150,000T coal carriers, which would be promoted by five KEPCO’s affiliates in Korea. Since a shipping company and five power generation companies in Korea entered into the Contract of Affreightment (COA) for shipment of bituminous coal, it appears that a contact between a shipping company and shipbuilder would soon be signed.
 
The industry report has anticipated that HHIC’s Yeongdo Shipyard would speed up normalizing its business by aggressively participating in
winning bids after solving all labor problems. In fact, the metal worker’s union has even announced that it would be supportive in normalizing the
Company’s business.

An official from the HHIC said, “We have made continued efforts to win bids with a goal of normalizing our business despite current economic
slowdown and operational risks such as a labor strike.” He added, “We are about to successfully conclude a deal on the OSV with a European
shipping company.  In addition, we have actively participated in domestic bids to build bulk carriers.”