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HMM negotiates 20% rate cut with Capital Product Partners

HMM has negotiated a 20% cut in rates for five containerships it has on charter from Capital Product Partners as part of its ongoing restructuring programme.

The post-panamax boxships Hyundai Prestige, Hyundai Premium, Hyundai Paramount, Hyundai Privilege and Hyundai Platinum (all 5,023 teu, built 2013) are on timecharter until 2025.

The two parties agreed on Friday to reduce each vessel’s daily charter rate from $29,350 gross to $23,480 for a three-year period, commencing this month and ending in December 2019.

CPP said this would reduce HMM’s payments by $37m in total as a result.

Once the three-year period is up, the original charter rate of $29,350 per day will be restored and will run until each charter expires in 2025.

CPP is to receive compensation in exchange for the rate cuts, which is expected to be finalised before July 23. The company will either receive HMM shares, which are listed on the Korean Exchange, and/or an unsecured loan to HMM for $37m, which will accrue 3% interest per annum plus any other amounts to be determined.

“While the impact of the HMM vessels’ charter rate reduction will adversely affect our cash flows until the end of 2019, when the charter rate under the respective charter parties is expected to be restored to the original rate, we believe that the reduced charter rate and the charter reduction compensation that we expect to receive represents a more favorable outcome given the alternative employment opportunities in the current depressed container charter market,” said Jerry Kalogiratos, CEO and CFO of CPP.

Kalogiratos said CPP was pleased that HMM’s restructuring had been settled out of court and welcomed HMM’s intention to join the ‘2M Alliance’, the world’s largest container shipping consortium, alongside Maersk Line and Mediterranean Shipping Co. (MSC).


Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.
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