The two largest South Korean carriers, Hanjin Shipping and Hyundai Merchant Marine (HMM) are raising their exposure to the container shipping market with recent moves to divest their respective non-liner shipping assets, but these efforts come at a time of severe competition in the container market, according to Alphaliner.
Currently, neither of the two Korean companies has the financial resources to proceed with new orders for next-generation large container ships on its own, which would allow them to compete more effectively with their peers, Alphaliner says.
Hanjin Shipping said in a Korea Exchange filing on October 2 that, as part of a financial restructuring plan, the company may sell its remaining 22.2% stake in H-Line Shipping, which owns Hanjin’s dry bulk and LNG shipping businesses.
In June 2014, Hanjin had already sold a 77.8% stake in H-L Shipping to private equity firm Hahn & Company for USD 298 million, thereby relinquishing control of seven LNG carriers, 29 bulk carriers and related shipping contracts. The sale of its remaining stake would end Hanjin’s links to LNG and dry bulk shipping, as the carrier seeks additional cash after failing to sell its container terminal in Algeciras, Spain. Hanjin also considers a sale of its 50% stake in the Busan New Port Terminal.
Meanwhile, HMM announced in a Korea Exchange filing on October 6 that its dedicated dry bulk shipping businesses and HMM America, which owns two HMM-operated container terminals Los Angeles (California United Terminal) and Tacoma (Washington United Terminal), have been amalgamated under Hyundai Bulk Line, a new entity that HMM created on September 23.
HMM and Hyundai Bulk Line will then issue “Hybrid Convertible Bonds”, in an effort to boost the group’s liquidity.