Hyundai Merchant Heading for Bankruptcy ?
A bankruptcy of Hyundai Merchant Marine (HMM) would become the biggest ever in the shipping sector, and the creditors seem on the way to taking over control with the shipping group.
Without further government support, bankruptcy is growing closer for Hyundai Merchant Marine (HMM) after the company's bondholders rejected the company's proposed debt rescheduling plan, says Alphaliner.
"The potential bankruptcy of the financially troubled South Korean carrier would be the largest-ever in container shipping. Based on the total vessel container capacity operated by the respective insolvent carriers, a failure of HMM would dwarf all previous bankruptcies in this sector," said Alphaliner, noting that the company's survival seems to depend on a government bail out.
The negotiations for charter rate reductions from shipowners over the past month have also failed.
Meanwhile, Hyundai Motor Group will not take over Hyundai's troubled shipping affiliate HMM, whose creditors recently rejected a debt rescheduling.
The government, says a source, recently suggested that Hyundai Glovis, a logistics affiliate of Hyundai Motor, should manage the nearly bankrupt shipping company. The government reportedly considers both Hyundai Motor Chairman Chung Mong-koo and Hyundai Group Chairwoman Hyun Jung-eun as part of the Hyundai family oners and thus responsible for HMM.
Recentl, the nation’s second-largest shipping company said in a regulatory filing that “it filed for comanagement with its creditors” to tide over its liquidity crunch through a self-rescue plan.
The state-run Korea Development Bank and other creditors are to decide whether to approve the proposal by March 29. If approved, the company’s maturing debts will be rolled over and part of them will be rescheduled.
HMM has decided to sell its stake in the Busan-based Hyundai Pusan New-Port Terminal Co. in an attempt to return to liquidity.
The Korean Minister of Oceans and Fisheries (MOF) Kim Young-suk earlier this week advised the company not to merge with its compatriot Hanjin Shipping as he told The Korean Economic Daily that the merger “would be a huge loss for the Korean shipping industry if we lose one of them that has maintained its hard-won membership.”
The company has 4.7 trillion won in total debt and 1.8 trillion won was borrowed from creditor banks. HMM has to repay the debt of 120 billion won by April 7.
