Government considers merging Hanjin Shipping and Hyundai Merchant Marine

The government of South Korea stated that they would consider merging ailing Hyundai Merchant Marine (HMM) and Hanjin Shipping, should they successfully normalize their operations. Currently, the two debt-riddled shippers are undergoing restructuring programs.

Depending on the outcome of the program, state-run Korea Development Bank (KDB) would emerge as the controlling stakeholder of the firms, whilst the government would then lead the merger of the pair in the future.

Restructuring update:

According to sources, Hanjin Shipping continued to struggle to obtain a cut in charter rates during negotiations with the owners of its chartered fleet. The charter rate cut was one of the key conditions set by its creditors for the company to avert court receivership.

According to sources, Hanjin Shipping, has been in talks with about 22 owners of chartered ships since April 2016, but reported little progress during negotiations.

Hanjin’s struggle for a charter rate cut was in stark contrast to its smaller local rival, Hyundai Merchant Marine, which has reached an agreement with its ship owners to cut charter rates by 21%.

Source: KoreaTimes

 

 

Hyundai Merchant’s shares fall on concern of share dilution in debt swap

Shares of Hyundai Merchant Marine Co. plunged 19% in trade today, the most in 3 months, as investors worried that the company’s debt-to-equity exchange plan would dilute their shareholding.

Hyundai Merchant’s stock declined to KRW 15,000 in trade in Seoul, today.Rival firm Hanjin Shipping‘s shares also dropped as much as 9.2%, as investors feared a similar outcome, as the company is in negotiations with lenders about a possible swap, similar to Hyundai’s.

Hyundai Merchant will issue 236m new shares to its creditor banks, bondholders and shipowners in the debt-for-equity swap as part of its restructuring plan.

The plan follows South Korea’s Finance Minister Yoo Il Ho’s call for restructuring in the shipping industry as weak demand and dwindling cash levels hurt the companies.

The nation also prepares to start a KRW 11tn fund aimed at restructuring its ailing shipbuilding industry.

Source: Bloomberg

Hanjin Shipping yet to negotiate cut in charter rates

According to sources, troubled South-Korean shipping firm Hanjin Shipping Co. is yet to successfully negotiate a cut in leasing rates with the owners of its chartered ships, which was a key precondition set by its creditors to avert court receivership.

The company was yet to receive a favourable response from the owners of charter ships as of date. However, Hanjin’s struggle for the charter rate cut is in stark contrast to its smaller local rival, Hyundai Merchant Marine Co., which has reported “significant” progress in its charter rate reduction talks.

Hyundai Merchant, won approval from its bondholders for restructuring about KRW 800bn ($671m) of its debt during negotiatio

Based on information from certain sources, Hanjin Shipping faced difficulty in negotiations as it had to negotiate with a large number of shipowners.

Previously, a vessel operated by Hanjin Shipping was impounded for three days in South Africa for unpaid charter fees, raising concerns that the shipper’s financial status has dramatically worsened.

Last month, creditors of Hanjin Shipping accepted the troubled shipping giant’s debt restructuring plan, also granting a three-month suspension on all payments of principal and interest.

According to creditors, the self-restructuring plan would only be effective as long as all of the company’s lenders and shipowners chartered by Hanjin also remained committed.

Last month, the shipper’s bondholders approved some 36 billion won worth of debt recast proposal.

Separately, Hanjin Group’s, the parent company of Hanjin Shipping, chairman Cho Yang-ho agreed to give up his managerial control of the shipping unit under the self-rescue plan.

As of end-2015, the company’s total debt reached KRW 5.6tn.

Source: Hellenic Shipping News

Hanjin Shipping to begin creditor-led debt restructuring

South Korea-based Hanjin Shipping reached an agreement with creditors who have agreed to offer financial assistance to the company and initiate a corporate restructuring program.

Creditor banks, led by state-run Korea Development Bank, approved Hanjin’s debt restructuring proposal at a meeting on Wednesday.

The conditions for the bailout include reduced charter rates that Hanjin pays out to foreign shipowners, retaining a global alliance membership and signing a debt restructuring agreement with bondholders.

The agreement comes days after Hanjing Shipping submitted a revised self-rescue measure to creditors on 2 May 2016.

The creditors plan to give a three-month maturity extension of principal and interest starting and roll out debt refinancing measures by hiring accounting firms.

The company plans to finalize negotiations with 22 shipowners by the end of May 2016. Further, it also plans to hold a meeting with bondholders on 19 May 2016 to extend the maturity date on KRW 35.8bn won of its bonds by four months.

Source: The Korea Herald