SOUTH Korea's debt clearing house Korea Asset Management Corp (KAMCO) will take control of 20 ships worth KRW390 billion (US$344 miliion) owned by six local lines, according to media reports.

KAMCO will sign a contract to acquire the ships - a mix of containerships and bulk carriers - from SM Line, Korea Shipping, Korea Line, Namsung Shipping, Dooyang and Pan Ocean next week.

Ten of the 20 vessels were previously owned by now-defunct Hanjin Shipping, which filed for court receivership in its native South Korea in late August 2016, and was officially declared bankrupt by a South Korean bankruptcy court in February 2017.

The ships will then be leased back to the six lines via 20 special purpose companies.

With the fund, the cash-strapped carriers will be able to boost their financial health by paying off debts with high borrowing costs, and switching from short-term loans to long-term loans. In addition, this could also help ease the financial troubles of SM Line, the nation's newest carrier, which acquired some of the major assets of Hanjin Shipping.