Asia/Pacific News
Hyundai Merchant Marine Comes One Step Closer to Stabilizing Its Business and Financial Status
Debt-ridden Hyundai Merchant Marine (HMM) has announced in an emailed statement that the investors who attended a meeting to discuss a debt recast offer have accepted the company’s conditions, which include swapping KRW 800 billion ($672 million) with HMM stocks.
HMM states that three of five bondholders’ meetings were successfully concluded, with the two remaining scheduled for Wednesday; in addition to the debt equity swap, the parties agreed that the remaining debt will be payable in three year instalments with a two-year grace period.
Last year, HMM paid KRW 1.9 trillion ($1.59 billion) to 22 owners of chartered ships, equivalent to 32 percent of its annual sales of KRW 5.8 trillion ($4.87 billion); in total, the troubled shipper owes about KRW 5.2 trillion ($4.36 billion).
Following debt settlement, HMM says it hopes to join a new global shipping organization, The Alliance, which rival Hanjin Shipping joined last week along with other shippers including Germany’s Hapag-Lloyd, Japan’s NYK, and Taiwan’s Yang Ming; analysts have suggested that a tie-up with Hanjin will help ensure HMM's survival.
The membership in Alliance is said to be guaranteed if HMM can surmount another hurdle, in the form of negotiating charter rate cuts; to that end, the company says it is “expected to reach an agreement soon,” with “meaningful progress” made with 5 container ship owners to date and the “utmost efforts” being put into reaching agreements with bulk ship owners.
HMM also has to persuade non-secured bondholders such as the National Credit Union Federation of Korea to extend the maturity of its debt ending this year and next.
An HMM spokesperson said of these developments, “We sincerely thank our investors’ kind understanding and trust, as their support is vital for normalizing HMM’s business.”
In April, HMM promised that its business and financial status would be "stabilized" upon completion of charter negotiations and debt restructuring by June - but that it would default on the repayment of its debt.
