Korea Development Bank (KDB) has stepped in to save struggling Hyundai Merchant Marine (HMM), multiple outlets in Seoul are reporting. The Korean line will shortly become a subsidiary of the state-run bank, local media reports. HMM’s largest shareholder, Hyundai Elevator, will cut its shareholding in the line, while banks, led by KDB, will convert their bonds into equity, according to Business Korea. The transaction, however, has not been confirmed by KDB, which in a statement today suggested no deal is yet in place to make HMM a subsidiary.
KDB owns more than half of HMM’s KRW1.2trn ($1.06bn) bonds. It is looking to take a 30% stake in HMM through a debt-for-equity swap, with other creditors taking 20%, Business Korea, and other local media outlets, maintained.
Yesterday’s announcement of a new container alliance, the Ocean Alliance, comprising CMA CGM, OOCL, China Cosco Shipping and Evergreen, is thought to have sped up KDB’s decision to act fast.
The arrival of the Ocean Alliance shakes up all existing alliances and HMM will need to be seen as an ongoing financial certainty by its peers in the coming weeks of container alliance haggling that will ensue or else it will be left out on its own.
HMM, as well as selling off many divisions, had been desperately negotiating with owners to cut the fees of its chartered in fleet in a bid to keep creditors at bay. HMM officials say they have come to an agreement with around 60% of the owners involved so far with negotiations soon to draw to a close.
The news that the KDB might take over HMM is being watched with interest by investors and employees at compatriot line Hanjin Shipping, which has its own debt problems that need to be ironed out fast.
