South Korean integrated logistics and container-freight transport company Hyundai Merchant Marine Co.’s bondholders plan to decide whether to approve the company’s debt restructuring offer during a two-day meet which continues till Wednesday.
During the meeting, Hyundai Merchant would propose a plan to swap more than half of its debt of approximately KRW 800bn ($672m) for equity and the payment of the remaining debt after two years.
Previously, creditors, led by state-run Korea Development Bank, agreed to swap KRW 680bn worth of debt for the company’s equity, as part of efforts to keep it afloat. Hyundai Merchant had debts of about KRW 5.2tn as of 31 March 2016.
The debt recast is one of the key prerequisites for the company to be put under a creditor-led rehabilitation scheme.
As part of its restructuring, Hyundai Merchant was in final talks with owners of its chartered ships to cut leasing rates, whose outcome may come out later this week. According to creditors, high charter rates were negatively impacting the company’s financial health, and a cut in the leasing rates was one of the key preconditions for the survival of the shipper.
Hyundai Merchant paid a total of KRW 1.9tn won to 22 owners of chartered ships in 2015, which accounted for 32% of its annual sales of KRW 5.8tn.
Creditors have also demanded that the shipper be included in a global shipping alliance to stay competitive. However, the company may be excluded from joining the group unless it cuts its charter rates and reschedules its debt.
Hyundai Merchant stated that its inclusion into a global shipping alliance would be guaranteed if it successfully negotiates charter rate cuts and its debt recast is approved by its creditors and bondholders.
Source: Yonhap News Agency