NPNYY Nippon Yusen Kabushiki Kaisha (PK)

SEOUL—Korea Line Corp., a midsize bulk shipping operator, won the bidding for the assets of bankrupt Hanjin Shipping Co.'s Asia-U.S. route and its stake in a California terminal.

A judge at the Seoul Central District Court, which is handling Hanjin's insolvency proceedings, said it chose Korea Line over Hyundai Merchant Marine Co.—which had been widely expected to win. Hyundai Merchant was backed by the government and its creditors, which said they would promote the company as the country's largest oceangoing carrier.

"Korea Line proposed better terms, including higher prices," the judge said. "It also offered to take over more Hanjin employees.

The court aims to sign a formal contract next week with Korea Line, an operator of dry bulkers and liquefied-natural-gas carriers, and complete the sale process by the end of November, he said. Neither the court nor Korea Line would reveal the value of the deal, but local media reports put the sale price at up to 250 billion won ($214 million).

The Hanjin assets pursued by Korea Line and Hyundai Merchant—both seeking to expand their fleets—include five container ships, a business network and the workforce involved in running the trans-Pacific route, as well as a 54% stake in Total Terminals International LLC, which runs Long Beach Terminal in California.

Korea Line said on its website about two thirds of its revenue of 532 billion won last year came from its bulker business, while tankers and other businesses accounted for the rest.

Suffering two years of rock-bottom freight rates, the global shipping industry is consolidating, with some operators filing for bankruptcy while others have entered partnerships to stay afloat.

Japan's three largest shipping companies—Nippon Yusen KK, Mitsui O.S.K. Lines Ltd. and Kawasaki Kisen Kaisha Ltd.—said last month they would merge their container-shipping operations.

Hyundai Merchant, which became Korea's largest shipping line following Hanjin's collapse, is seeking to join the world's largest container shipping group, the 2M alliance, which includes Maersk Line, the shipping unit of A.P. Moller-Maersk A/S, and Mediterranean Shipping Co.

"We respect the court's decision today, but [its choice of Korea Line] is worrisome given that global shipping companies grow bigger in the game of chicken," Hyundai Merchant said Monday.

Hanjin's sale process heralds the beginning of the end for Hanjin, which filed for receivership in late August, disrupting supply chains world-wide.

Hanjin, once the world's seventh-largest container operator by capacity, is under court order to cut its workforce and dispose of assets such as ships and terminals.

Many brokers expect Hanjin eventually to be liquidated or reduced to a much smaller regional operator.

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

(END) Dow Jones Newswires

November 14, 2016 04:35 ET (09:35 GMT)

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