Struggling South Korean shipping company Hyundai Merchant Marine has concluded a deal with its creditors, led by the state-run Korea Development Bank, on a debt-for-equity swap worth KRW 680 billion (USD 570.27 million), the company confirmed in a stock exchange filing.
Previous reports claimed that the debt-for-equity swap will see KDB take 30 % of shares in total and the rest of the creditors will take 50% in shares.
The announcement comes on the back of the company’s talks on cutting charter rates with ship owners, the first round of which fell through as no deal could be reached. The talks resume.
HMM promised its creditors to reach a 28% cut in charter rates with ship owners in exchange for financial assistance. The company’s ability to avoid court receivership is also a precondition for it to enter the new carrier alliance together with Hapag-Lloyd, “K”Line, Mitsui O.S.K. Lines, Hanjin, Nippon Yusen Kaisha and Yang Ming.
Namely, HMM is still in talks on potential membership. However, the company believes that this is just a matter of time, pending completion of its business normalization process.
HMM’s operating loss for the first quarter of 2016 hit KRW 162.9 billion (USD 139 million) against KRW 253.5 billion from the corresponding period last year. Its net loss dived to KRW 276.1 billion further widening from KRW 44.5 billion loss from a year earlier. The company’s debts amounted to KRW 5.2 trillion at the end of March.
World Maritime News Staff