HMM Toils to Cut Charter Rates to Avoid Going Bust
Image Courtesy: HMMStruggling South Korean shipping company Hyundai Merchant Marine (HMM) will have to ensure lower charter rates with ship owners so as to avoid bankruptcy.
The company has been in talks with ship owners since February on lowering the freight rates. According to HMM’s spokesperson, cited by the Korea Herald, the negotiations are expected to complete by the end of April.
Details on the amount of cuts and potential number of concerned ship owners were not revealed.
An agreement on the matter would pave the way for a support from the company’s creditors who earlier this month refused to back the company’s proposal to delay debt payment. Fortunately, Korea Development Bank’s (KDB) came to the company’s rescue giving it a three-month maturity extension on its loans starting March 29th.
Earlier this week, cash-strapped Hyundai Merchant Marine announced its decision to sell its stake in the Busan-based Hyundai Pusan New-Port Terminal Co. in an attempt to return to liquidity,
Under the plan, HMM, which owns 50 percent plus one share in the port terminal, would sell 40 percent plus one share to the Port of Singapore Authority (PSA) for a price of some USD 85.7 million.
Furthermore, the shipping company has launched a self-rescue plan through which it filed for co-management with its creditors. HMM added that if the creditors decide in favor of the company, HMM’s maturing debts would be rolled over and part of them would be rescheduled.
HMM, which has loans of KRW 382 billion (USD 334 million) maturing in 2016 and KRW 606bn (USD 530m) in 2017, is on the course to report five consecutive years of operating losses.
World Maritime News Staff
