HMM told to cut charter costs or go bankrupt
Shipowners who have ships on charter to under pressure Hyundai Merchant Marine (HMM) look like they will decide the fate of the embattled Korean line. With analysts warning HMM’s bankruptcy would be the largest ever in the container sector, HMM said today its ongoing charter discussions with owners is likely to seal its fate one way or another, with creditors unwilling to roll over more debts and hand out more loans until it has successfully cut the fees of some of its expensively chartered in fleet.
In a letter sent by HMM’s ceo Paik Hoon dated February 1 to all owners the line charters from, the shipping boss stated: “Unless the time charter payments are significantly reduced … the company cannot survive.”
The charter negotiations are set to close by the end of April. HMM is saddled with more than $5bn of debts and has urgent repayments to make. HMM has KRW120bn ($103m) of debt to repay early next month and an additional KRW240bn in July.
“If HMM completes rate cut negotiations, we will come up with debt restructuring measures to help the company continue running with incoming profits,” a spokesperson from lead creditor Korea Development Bank (KDB) told local media today.
Even if the creditors do support HMM, others are less likely to keep throwing money at the ailing company.
Moon Chul-sang, chairman of the National Credit Union Federation of Korea, said at a press conference yesterday in Seoul that he was against extending debt maturity and debt-equity swaps for HMM.
If non-secured creditors keep refusing to budge, the debts will go into default, leading HMM to enter court receivership.
given the circumstances in the container market,prudent owners will undoubtedly accept lower freight rates