By
Rachel Uranga , Long Beach Press Telegram
Posted:
01/17/17, 5:59 PM PST | Updated: 2 hrs ago
A U. S. bankruptcy judge in New Jersey is expected to decide Wednesday whether to approve the sale of Hanjin Shipping’s stake in a Long Beach terminal over objections from creditors who fear they will get shortchanged.
The South Korean company’s financial collapse on Aug. 31 threw international supply chains into chaos. As part of a worldwide effort to unload its assets , the seventh largest shipping company agreed to sell its 54 percent stake in Total Terminals International LLC for $78 million to Switzerland-based Mediterranean Shipping, the second largest shipping company. The agreement would release the company of $52 million in debt.
But the deal, already approved in a South Korean court and signed off in Long Beach in December, hit a bump in recent weeks after insurers and companies that lease cargo containers to shippers attempted to block the sale.
At the heart of the concern is fear that assets from the South Korean company’s sale of its stake will leave the United States and creditors empty handed.
The terminal company operates Pier T at the Port of Long Beach and Terminal 46 at the Port of Seattle. But it’s teetering on the brink of insolvency, according to court documents. Slowdown at the Long Beach terminal last year hit the port especially hard as cargo volumes plummeted after Hanjin’s fall.
Long Beach depends heavily on revenue from the lease to operate. About a quarter of the container cargo that passed through Long Beach last was handled at Pier T. But officials said they are not too worried.
“The agreements that we have made assume the sale is going to go forward,” said Long Beach Deputy City Attorney Charles Gale. “If it doesn’t go forward, it’s not clear what would happen.”
At the time of the sale, port officials welcomed the new owners, hopeful that it would open up the port for business once again.
But attorneys for the cargo container company, New Jersey-based Seacube Containers Ltd., argued in court documents that Hanjin didn’t conduct a fair auction to sell the terminal, and as a result failed to get a competitive price for the prime piece of real estate.
“It is clear the proposed sales price was not the highest and best offer received,” lawyers for Seacube stated in documents filed this month.
One unsuccessful bidder would have spent up to $147 million for the lease that runs though 2027, lawyers said.
But the biggest worry is that the sale proceeds will go to Korea, where they worry U. S. creditors won’t get the same protection.
With Total Terminals in deep financial distress, Hanjin and the terminal operators call the speedy sale of their assets necessary.
“A prompt sale to the purchasers will eliminate the imminent risk that TTI will run out of cash,” lawyers for Wells Fargo, a lender to TTI, said in documents.
Reach the author at ruranga@scng.com
or follow Rachel on Twitter: @racheluranga .

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A U. S. regulator has sued Qualcomm over the way it licenses cellular patents to smartphone makers — joining South Korea and potentially other governments in seeking to upend the San Diego’s company’s patent royalty practices.
The Federal Trade Commission filed the civil lawsuit Tuesday in U. S. District Court in Northern California. The company also faces investigations in Europe, Japan and Taiwan.
The FTC lawsuit comes a month after the Korea Fair Trade Commission fined Qualcomm $865 million over patent royalties. The company vowed to fight in South Korea’s courts, calling the regulators’ action inconsistent with the facts and a misapplication of fundamental tenets of competition law.
The FTC alleges Qualcomm used its dominant market share in wireless chips to get excessive royalties on key, standard essential patents, which are supposed to be made available at reasonable rates under law.
The agency also says Qualcomm gave Apple rebates in exchange for being the exclusive supplier of cellular modems in iPhones from 2011 through 2015 — hurting competitors.
The FTC isn’t seeking specific damages but asked the court to take steps to prevent Qualcomm’s alleged anti-competitive practices from happening again.
The agency’s governing board voted 2-1 to bring the lawsuit. Commissioner Maureen Ohlhausen objected on the grounds that court action is based on a flawed legal theory, will undermine U. S. intellectual property rights worldwide and comes on the eve of a new presidential administration.
Qualcomm echoed those concerns, calling the FTC’s lawsuit “midnight litigation” brought as Chairwoman Edith Ramirez leaves the agency and President-Elect Donald Trump takes over the White House.
“Qualcomm was still receiving requests for information from the agency that would be necessary to an informed view of the facts when it became apparent that the FTC was driving to file a complaint before the transition to the new Administration,” said Qualcomm General Counsel Don Rosenberg in a written statement. “We have grave concerns about the two Commissioners’ decision to bring this case despite a lack of evidence supporting the allegations and theories in the complaint.”
Qualcomm makes money not only designing mobile semiconductors, but also by licensing its vast portfolio of wireless patents on key cellular technology.
While sales of wireless semiconductors generated nearly two-thirds of Qualcomm’s $23.5 billion in revenue last year, patent licensing accounted for the bulk of its $5.7 billion in profit.
The company’s patent licensing business has been controversial, with smartphone makers complaining that the company charges too much for its intellectual property.
Qualcomm contends that its cellular technology is vital to making smartphones truly mobile. Without it, devices could not tap into the wireless Internet from virtually anywhere.
Qualcomm charges patent royalties that average about 3 percent based on the wholesale price of the smartphone. The company typically licenses its entire wireless patent portfolio, which includes thousands of diverse inventions.
Regulators worldwide ratcheted up scrutiny of Qualcomm in the wake of China’s 13-month long anti-monopoly probe, which resulted in a $975 million fine in February 2015.
The FTC began investigating Qualcomm’s patent business in late 2014. In its complaint Tuesday, the agency singled out Qualcomm’s “no license, no chips” policy, which requires smartphone makers that buy the company’s wireless semiconductors to also license its patents.
The FTC contends that the tactic forces cell phone manufacturers to pay higher royalties regardless of whether they buy chips from Qualcomm or rivals such Intel or MediaTek.
“This is an anti-competitive tax on the use of rivals’ processors,” said the FTC in a statement.
Because of its dominant market position, the risk of losing access to Qualcomm’s cellular modems is too great for smartphone makers to not take a license, according to the complaint. Qualcomm licenses patents to device makers but refuses to license to rival chip firms, according to the FTC.
In addition, the complaint says Qualcomm gave Apple rebates to make sure it was the exclusive supplier of cellular modems in iPhones from 2011 through 2015.
“Qualcomm recognized that any competitor that won Apple’s business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors,” said the FTC.
During that period, Qualcomm had a significant technology advantage over rivals in performance of 4G LTE wireless data modems. Last year, Apple began using Intel for LTE chips in some iPhones as it caught up with Qualcomm.
Qualcomm’s shares ended trading Tuesday down 4 percent at $64.19 on the Nasdaq.
A federal judge in San Francisco has approved a $15-billion court settlement against Volkswagen for its emissions-cheating scandal.
Walgreens plans to let customers pick up and drop off packages shipped through FedEx at a number of pharmacies, the companies said Jan. 11. (Jan. 11, 2017)
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Candy and pet-care giant Mars Inc. has agreed to buy animal hospital chain VCA Inc. for $7.7 billion in cash, the companies said Jan. 9. (Jan. 9, 2017)
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Japan is planning to launch a missile defense satellite next Tuesday to upgrade the country’s surveillance network that can detect and track North Korea missile launches.
The satellite will be launched from Tanegashima Space Center in Kagoshima Prefecture, NHK reported on Tuesday.
The satellite Japan’s self-defense forces will be launching is mainly for ballistic missile defense. It is likely the satellite is a countermeasure to North Korea’s developing missile capability, according to the report.
The step is also being taken as Japan’s SDF is shouldering more responsibilities, in line with security legislation ratified in 2015.
In December, Japan’s military was allowed for the first time to use firearms and other weapons in peacekeeping missions in South Sudan.
Japanese law now allows its military to serve in overseas missions whenever it or a close ally is attacked.
After it is launched, the new satellite could exchange large amounts of data at high speeds among military units, including launch information and videos from overseas bases, according to the report.
X-band satellite communication, capable of transmitting and receiving large amounts of data reliably, will be used among military units deployed across different areas, because X-band communication is not easily affected by weather or terrain.
The new satellite is named Kirameki No. 2. Another satellite was originally scheduled to launch on July 1, 2016, but was damaged while in transit and the launch was canceled, according to NHK.

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