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

Hyundai Merchant presses bondholders to approve restructuring plan

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

Hyundai Merchant Marine’s creditors agree to $570m debt-for-equity swap

Creditors of South Korean container-freight logistics provider Hyundai Merchant agreed to a debt-to-equity swap involving the company’s debt of KRW 680bn ($570m), according to lead creditor Korea Development Bank.

The agreement is contingent on conditions including Hyundai Merchant Marine joining an alliance involving major shipping firms.

Source: Reuters