WASHINGTON: Hyundai Merchant Marine is selling its stake in the Busan New Port in an effort to stave off bankruptcy ahead of this year’s maturation of debts valued at 382 billion South Korean won ($334 million) with another 606 billion won due in 2017.
The 80 billion won sale was announced several months after Hanjin Shipping sold its shares in a New Port terminal as part of its own efforts to maintain liquidity and is the latest in a series of moves both container lines have taken to ensure their survival.
PSA International is reportedly interested in the stake and expected to make the buy, but HMM has said more than one investor could acquire the stake it’s selling.
Sources have told IHS Fairplay, a sister product of JOC.com within IHS, that HMM and PSA have been discussing the deal since early January, with PSA starting due diligence in February.
HMM has divested its LNG businesses, U.S. container terminals and dedicated bulk shipping services, on top of sales of stakes in Hyundai Logistics and tour operator Hyundai Asan. The company has also sold two of its three very large crude tankers. Hanjin has also divested from its bulk and LNG operations and is reportedly contemplating the sale of assets such as office space and terminal operations.
Despite HMM’s efforts, CEO Lee Paik Hoon in a February letter beseeched shipowners from which HMM charters vessels to give it much-needed rate discounts. The charterers refused, pushing the carrier closer to bankruptcy. HMM’s creditors are said to have demanded it secure a 30 percent reduction in its charter costs, upon which the Korea Development Bank will agree to swap 800 billion Korean won of debt for equity in the shipping line.
The firm got some breathing room when the KDB, one of its biggest creditors, gave HMM a three-month extension on principal and interest payments, starting March 29. HMM ended 2015 with a loss of 443.5 billion won, which is its fifth straight negative annual result.
