Hyundai Heavy Industries’ (HHI) decision to help out fellow Korean line Hyundai Merchant Marine (HMM) last year has landed it in a further awkward position. HHI, already reeling from many postponed and cancelled big offshore contracts, is likely to suffer for its decision last year to issue $220m worth of bonds exchangeable for HMM equities.
However, since HMM, now in debt restructuring, has seen its share price nosedive, investors in HHI’s bonds can demand that the shipyard repay their principal investment.
HHI is the second biggest shareholder with a 9.9% stake in struggling HMM. HHI has been hit by a recent credit ratings downgrade to A+ from AA-.
