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.
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%.
According to sources, creditors of South-Korea’s Daewoo Shipbuilding & Marine Engineering urged the company’s workers to refrain from going on strike, saying that it would deter the ongoing efforts to restructure the financially shaky firm.
Sources state that about 7,000 unionized workers at Daewoo Shipbuilding’s yards are scheduled to vote on whether or not they will launch a strike, claiming that the shipbuilder’s restructuring schemes submitted to its creditors negatively impacts the workers employment.
The results of the decision to strike is expected to come out by late Tuesday.
The company and union, in particular, are also at odds over the plan to slash the workforce by an additional 2,300 to 10,000 by 2019.
Last year, Daewoo Shipbuilding’s creditors provided KRW 4.2tn ($3.58bn) in financial aid to prevent its workers from going on a strike. Since August 2015, the creditors, led by state-run Korea Development Bank, have provided KRW 3.2tn in financial help to the shipbuilder.
Last week, the shipbuilder mapped out a KRW 5.3tn self-rescue plan, approved by its creditors, which includes asset sales and a spin-off of key business units.
Separately, the union of Hyundai Heavy Industries is set to hold a meeting of its representatives on Friday to decide on whether to go on strike.
Source: Korea Times
The Government of South Korea plans to create a KRW 11tn ($9.5bn) fund to support restructuring of the nation’s shipping and shipbuilding industries. The move comes in line with the central bank’s decision to lower benchmark borrowing rates as part of pulling the nation’s economy out of its slump.
The government aims to start operating the fund from 1 July 2016 until the end of 2017.
According to South Korea’s Finance Minister Yoo Il Ho, the fund would buy hybrid bonds issued by state-run banks.
Separately, the finance ministry plans to inject KRW 1tn of capital into the Export-Import Bank of Korea by September 2016 to ensure Kexim’s capital ratio doesn’t fall by too much.
The government currently estimates that these lenders would require about KRW 5 – 8tn of capital, assuming that Korea Development Bank and Kexim meet BIS ratios of 13% and 10.5%, respectively. KDB’s ratio currently was at 14.6% while Kexim’s was 9.9%.