Bondholders of cash-strapped Hyundai Merchant Marine (HMM) have approved the company’s debt-for-equity swap deal, the company confirmed in a stock exchange filing.
The company held meetings with its five bondholders over the past two days who hold KRW 804.3 billion in publicly traded bonds.
Under its KRW 680 billion debt-for-equity swap deal, cleared last week by the company’s creditors, HMM plans to offer debt-equity swap for over 50% of the values while the outstanding amount is to be payable in three yearly instalments after a two-year grace period. The interest rate would be lowered to 1 percent from the current annual rate of 5 to 6 percent.
The bondholders were given an option to sell their shares acquired through debt-equity swap once the shares issued.
In addition, HMM has agreed with the company’s creditors, including the Korea Development Bank, to reschedule debt payment due this and next year.
The completion of the swap will enable HMM to regain financial stability, curbing its debt ratio to under 400 percent as required by the Korean government.
Furthermore, the normalization of the company’s business, would pave the way for the struggling shipping company to join the new global shipping alliance.
“Members of THE Alliance said they will help HMM’s induction once we regained our financial health,” an HMM official is quoted as saying by the Korea Times.
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.
Joining THE Alliance, composed of Hapag-Lloyd, “K”Line, Mitsui O.S.K. Lines, Hanjin, Nippon Yusen Kaisha and Yang Ming, is also conditioned upon the company’s ability to reach a deal on reduction of charter rates with ship owners. The talks with owners are progressing well, the company claims.
HMM promised its creditors to reach a 28% cut in charter rates with ship owners in exchange for financial assistance.
The shipping company has accrued a debt of USD 4.36 billion at end-March.
World Maritime News Staff