Representatives at Japanese shipping major Kawasaki Kisen Kaisha (K Line) have rubbished reports from China that the line will shortly follow Hanjin Shipping into administration. A report carried by Shanghai Metals suggested K Line will file for bankruptcy protection within the next two weeks.

Kiyoshi Tokonami, general manager of K Line’s IR & PR Group, dismissed the report today. Speaking from K Line’s HQ, Tokonami told Splash rumours of them filing bankruptcy are “untrue, completely groundless”.

Adding further fuel to the bankruptcy speculation, Splash has received an image purportedly to be an emergency notice from a Chinese shipper that states K Line will follow Hanjin into court receivership either next week or within two weeks. In May, ratings agency Moody’s downgraded K Line from Ba2 to Ba3. As of the end of its last financial year, March 31 2016, its gearing ratio stood at 1.48:1. K Line, also in the red in the first quarter, warned at the end of July its full year loss will be worse than originally forecast. K Line is now bracing for a full year loss of Y45.5bn, some Y10.5bn worse than originally predicted in April, the start of the Japanese financial year.

Japanese shipping has been rocked by big bankruptcies in recent years – Sanko Steamship and Daiichi Chuo being the two most high profile. A K Line receivership, however, would be on a whole different scale given its scale and diverse business activities.

Earlier this month Splash reported that a Japanese fund run out of Singapore called Effissimo was gearing up to take over K Line. Effissimo has been steadily building its stake in Japan’s third largest line to the point whereby it is now the largest shareholder with a 37% holding as of early August, up from 6.2% a year earlier.

Effissimo Capital Management, established in Singapore by ex-colleagues of activist investor Yoshiaki Murakami, has become the top shareholder in the line as well as in other well known Japanese brands such as office equipment maker Ricoh. Its strategy has been to target Japanese firms it deems undervalued.

However, K Line’s Tokonami today dismissed the takeover talk. “We are having dialogue, explaining our business plans as is usual with any shareholder,” Tokonami said, adding: “Effisimo says their stake is purely for investment purposes.”

K Line shares are trading today at JPY263, up by 2.7%.