CAI International Announces Estimated Impact Of Hanjin Bankruptcy

(RTTNews) - CAI International, Inc. (CAI), a transportation finance and logistics company, announced Friday the estimated impact to the company of the bankruptcy filing by Hanjin Shipping Co., Ltd.

On August 31, Hanjin, the world's 7th largest container shipping line, announced that it had filed for court protection in South Korea from its creditors. A receiver was appointed on September 1.

CAI said it has approximately 15,000 containers on lease to Hanjin representing $40 million of equipment exposure based on net book value, or approximately 2% of its rental revenue assets.

CAI's share of the overall container leasing market is approximately 6%, however, the company said it believes that its equipment only accounts for approximately 2% of Hanjin's leased container fleet.

The company expects that most of its containers will be recovered as these units on lease to Hanjin were manufactured for CAI in its color, with logo and markings, which should assist with recovery and re-leasing efforts.

CAI added that it maintains insolvency insurance that covers the value of unreturned containers, damage to recovered units, recovery costs, legal expenses and the loss of post-bankruptcy income for a particular period.

Based on the level of exposure to Hanjin and recovery expectations, the company expects its insurance policy limits to be more than adequate to cover any potential losses in excess of the $2 million deductible.

According to the firm, the total impact of Hanjin's bankruptcy filing on its financial results would be limited to $2.6 million of accounts receivable related to income recognized prior to the third quarter of 2016, which is not insured and may not be recovered, and up to the $2 million deductible on insolvency insurance policy.