Hyundai Merchant Marine Keeps Afloat
Last week when we blogged on Hyundai Merchant Marine (HMM), South Korea’s second largest largest container carrier’s theme song was Queen’s “Another One Bites the Dust” as the shipping company seemed headed for receivership.
This week, “Staying Alive” by the Bee Gees seems a better fit.
HMM’s future is by no means secure, but the container carrier has made big deals this week to keep the company from drowning in bankruptcy.
A majority of Hyundai Merchant Marine Co Ltd (HMM) bondholders have approved a debt-for-equity swap plan, South Korea’s second-largest shipper said on Wednesday, paving the way for restructuring of the heavily indebted firm’s finances.
HMM, which had debts about 5.2 trillion won ($4.36 billion) at end-March, has about 804.3 billion won in publicly traded bonds outstanding, a spokesman said.
The debt restructuring plan includes a debt-for-equity swap for over 50 percent of the applicable bonds, while the remaining amount is to be payable in three-year instalments, after a two-year grace period.
Last week, HMM’s creditor banks agreed to a 680 billion won debt-for-equity swap.
Getting debtors to take stock for the money HMM owed is huge for keeping the shipping company afloat.
When negotiations with ship charters ended in failure for HMM to get approximately 30% lower charter rates on the container ships they use, it looked like the company would be washed away in a tide of receivership.
Luckily, government aid stepped in.
Pulse News reports, “With the support from the government and state bank, Hyundai Merchant Marine is expected to wrap up talks with foreign ship owners on new favorable terms of leasing out vessels.”
In fact, the article points out that the better vessel leasing terms and debt-for-equity swaps get HMM most of the way to being saved from sinking:
The company has met two of the three conditions creditors laid out for debt relief program and custodianship instead of sending the shipper to court receivership – cutting charter fees and persuading individual bondholders to reschedule debt along with membership to multinational maritime alliance group.
That third condition of joining a carrier alliance appears to be a done deal as well.
Marine Link reports that HMM is joining the new THE Alliance:
According to a government official, key members of THE Alliance said they will support HMM’s membership application. Since the shipper successfully cleared a hurdle of debt adjustment negotiations with its bondholders, HMM’s entrance to THE Alliance is expected to be just a matter of time, he added.
When all is said and done, it appears HMM will remain on the international shipping waters. At least, for now.