Hyundai to be "Stabilized" by June - But Defaults on Multi-Million Dollar Debt Repayment

HMM says it will default on the repayment of its KRW804.28 billion ($697.4 million) debt.

Seoul-based Hyundai Merchant Marine (HMM) says its business and financial status will be "stabilized" upon completion of charter negotiations and debt restructuring by June - but that it will default on the repayment of its KRW804.28 billion ($697.4 million) debt.

In a statement this week, HMM, whose losses in its container division between 2008 and the first nine months of 2015 amounted to $352 million, said it is "fully focusing on the charter negotiation with foreign ship owners in order to complete the discussions by the end of April or early May.

"In addition, HMM will convene additional bondholders' meetings within June to restructure all of its public bonds due this and next year, and pursue a restructuring of bonds including debt-equity swap with bondholders."

HMM went on to note that proceeds from the sale of its dry bulk dedicated business as well as stakes in Pusan New-Port Terminal and Hyundai Securities will be used "only for fuelling the normalization of the company's business, not for the repayment of the debts."

HMM explained that this is because achieving stable operation "is the most vital mission for the company to remain viable under the current unprecedented sluggish maritime market condition."

An external audit has shown HMM to have long-term liabilities of KRW2.45 trillion ($2.11 billion) and a working capital deficit of KRW2.06 trillion ($1.78 billion).

In the statement, an unnamed company official is quoted as saying, "HMM humbly apologizes about the current situation to all stakeholders.

"All of the employees at HMM are putting their utmost efforts to accomplish a noticeable breakthrough to stabilize the company's business as promptly as possible."

Last month, Drewry Maritime Equity Research postulated that since HMM's container division has grown as a result of asset sales, the company is a good candidate for a merger with Hanjin Shipping, a move that would boost its chances for survival.