Shares in beleaguered Hyundai Merchant Marine (HMM) plunged 21% in Seoul today on news that the line will push for a capital reduction what will see every seven shares merged into one.
Moreover, Hyundai Group chairwoman Hyun Jeong-eun has decided to resign from the chair position of the board and management of shipping company.
HMM will reduce its capital to KRW173.2bn ($143m) from KRW1.2 trn as of April 21 to help improve its balance sheet.
Trading of Hyundai Merchant shares will be halted from April 20 to May 4, and will resume May 6.
The decision is subject to approval by shareholders in a meeting scheduled in mid-March. The newly merged issues will be listed on the market on May 6.
HMM notched up KRW253.5bn in operating losses, with its capital seriously eroded, which has led to speculcation it risks being delisted.
“A company could be subject to delisting if it has 50% or more of its capital impaired for two consecutive years,” an HMM official told Maeil Business, a Seoul-based newspaper. “We decided to take preemptive action by improving our financial sheet through share consolidation.”
Meanwhile, HMM has confirmed to Splash it is contemplating offloading its tanker division as it fights to remain solvent.
Splash reported yesterday local media reports from Seoul suggesting HMM, was willing to sell its tanker division. HMM has $610m of debt due by the end of the year, according to S&P Global Market Intelligence, and has been shedding assets fast to try and placate creditors. It has already committed to sell part of its dry bulk assets plus a terminal in Busan, while other parts of the Hyundai Group are chipping in too as HMM faces urgent debt repayments soon.
“Hyundai Merchant Marine is considering a sale of tanker business as one of the options for its restructuring plan, but nothing has been decided yet,” a spokesperson for HMM said.
Increasingly, it looks like HMM will become a pure container play if it can survive through 2016. A meeting with creditors is scheduled in the middle of this month to discuss pushing back debt payments.
HMM’s share price is down 47.7% this year, making it one of the worst three performers on the Kopsi 200.