Hanjin Group, the operator of South Korea's No. 1 airline, had the highest debt ratio among the country's top 10 business groups as of end-2013 due to its money-losing shipping affiliate, data showed Monday, fueling concerns over the family-run conglomerate planning to switch to a holdings company structure.

The debt-to-equity ratio of Hanjin Group, composed of six listed companies, snowballed to 452.4 percent as of the end of 2013, the highest among the 10 largest local conglomerates, according to data compiled by Chaebul.com, an online corporate research firm.

The ratio is more than triple that of Hanwha Group, the second-most indebted business group, whose rate was 144.8 percent, data showed. Six in the top 10 list had ratios of below 100 percent.

Hanjin's debt ratio had not eased over the three preceding years. It rose from 248.3 percent in 2010 to 381.9 percent in 2011 and 437.3 percent 2012. It added 8.5 trillion won of liabilities during the period.

Corporate watchers say the situation for Hanjin may not have improved much since 2013.

The debt for Korean Air Lines Co., the group's flagship unit, ballooned especially after acquiring Hanjin Shipping Co, a shipping and logistics unit, last year.

The air carrier's debt ratio shot up to 837 percent as of end-September, a 13.7 hike from the end of 2013, and it is expected to reach close to 1,000 percent when its posts its fourth-quarter earnings later this month. Hanjin Shipping's debt ratio reached 1,108 percent in the third quarter.

Grappling with high interest costs due to low credit ratings, Korean Air last week announced plans to issue new shares worth of 500 billion won (US$461.6 million) to try to improve its finances. The latest funding plan came after Hanjin sold all 2 trillion won worth of stake in S-Oil, the nation's No. 3 oil refiner, last July.

"Korean Air's debt ratio will go down if its operating earnings improve and it acquires cash from the stake sale in S-Oil and successfully issues new shares," said Kim Yong-geon, an official at the Korea Investors Service Inc., a Korean credit rating agency affiliated with Moody's.

Despite its efforts to improve the balance sheet, concerns remain over Hanjin's preparations to switch to a holding company structure to unwind cross-shareholding, a move associated with better corporate transparency but also with ownership succession to the third generation of the owner family, with its deadline slated for July.

Under the current law, a holding company is barred from possessing over 5 percent of stakes in its affiliates and must maintain the debt ratio at below 200 percent.

"Hanjin Group raised its financial risk because it failed to actively carry out restructuring over the past six years," Chung Sun-seop, Chaebul.com's CEO, said. "The company may face a crisis like other business groups if it does not conduct drastic reforms before it's too late." (Yonhap)