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.


Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.


  1. given the circumstances in the container market,prudent owners will undoubtedly accept lower freight rates

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