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Hyundai Merchant Marine may offer debt-for-equity swap in charter rate negotiations

Hyundai Merchant Marine (HMM) must renegotiate a 28.4% cut in charter rates before May 20 or will likely enter court receivership, and could offer equity to its counterparties to sweeten the deal.

Five unnamed shipowners from whom HMM has chartered vessels will visit South Korea today to wrap up discussions over the charter rates the company is paying, according to reports from the Korea Times.

HMM’s lead creditor, the Korea Development Bank (KDB), has suggested a debt rescheduling plan that includes a KRW700bn ($596m) debt-for-equity swap, subject to HMM succeeding in its charter fee negotiations. Other creditors are considering the plan and will deliver a response by May 24, the Korean paper reports.

HMM, alongside its creditors, is reportedly negotiating with 22 ship owners around the world. The largest owners affected are Danaos (13 vessels), Zodiac Maritime (six), Navios Maritime Partners (five), Capital Ship Management (five) and Eastern Pacific Shipping (five).

“In the meeting, we expect to reach a verbal agreement with the shipowners,” an official at HMM told the Korea Times.

HMM recorded KRW276.1bn ($235m) net loss during the first quarter 2016, with sales declining 18% to KRW1.2tr ($1bn). Its operating loss also widened to KRW163bn ($139m), compared to KRW4.2bn ($3.6m) in operating income last year.

Earlier this week, HMM failed to become a member of the THE Alliance, the latest consortium of major containership lines.

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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.

Comments

  1. Hope they can handle their debt structure or else it will be another merger with consolidation and it is a disturbing trend in an industry with a small profit margin.

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