Plans to Sell off Stakes in Affiliates Buoys Hyundai Merchant Stocks

HMM says potential sales of its stakes in affiliate companies will be intended to help improve the company's finances and secure liquidity.

Following news of plans to sell off their stakes in their affiliate companies, including its dry bulk ships that are tied to long-term contracts, Seoul-based shipping line Hyundai Merchant Marine Co., Ltd. (HMM) [KRX:011200] saw their stock prices surge by as much as 22 percent to KRW 3,480 ($2.89) during trading on Friday, the company's highest level since January 7, Bloomberg Business reports.

HMM's stock is said to have closed Friday at KRW 3,195 ($2.66), a 12 percent increase and a result that is said to have reduced this year's decline for the company to 23 percent.

HMM is reported to have announced in a regulatory filing that it has decided to sell a stake in Hyundai Asan Corp. (Hyundai Asan) for KRW 37.4 billion ($31.1 million) to its affiliate company Hyundai Elevator Co. (Hyundai Elevator).

Further, Reuters reports that a spokesperson for HMM on Monday said that the company intends to sell its majority stake in Hyundai Securities Co Ltd (Hyundai Securities).

Unidentified investment banking officials are said to have announced that the company has also signed a memorandum of understanding for the sale of its controlling share in its affiliate Pusan Newport Co. to Singapore-based PSA Corp.

In a regulatory filing Monday, HMM said that the possible sales would be intended to improve the company's finances and secure liquidity.

HMM is reported to have posted a net loss for four straight quarters through to September 30.

Last week, Ship & Bunker reported that it HMM had announced in a Korea Stock Exchange filing it is looking to exit the dry bulk sector.