Hyundai Merchant Marine focused on renegotiating charters, restructuring bonds

The South Korean shipping conglomerate is also considering sale of its tanker business as part of its “self-rescue” plan to increase liquidity and improve its finances, according to local media reports.    Hyundai Merchant Marine (HMM) said that following receipt of a $867 million bid for its 22.56 percent stake Hyundai Securities last week, it will accelerate other programs to negotiate ship charters and restructure debt.
   “HMM is fully focusing on the charter negotiation with foreign ship owners in order to complete the discussions by the end of April or early May,” the company said a press release issued by public relations firm Weber Shandwick.
   A report by Korea’s Yonhap news agency also said HMM was considering selling its tanker business, consisting of five to six ships. The article cited a regulatory filing that said this might be done “to secure liquidity and improve financial health,” adding that nothing has been decided yet.
   “In addition, HMM will convene additional bondholders’ meetings within June to restructure all of its public bonds due this and next year, and pursue a restructuring of bonds including debt-equity swap with bondholders,” the company said.
   The statement was made as HMM missed a payment on bonds due today, April 7. The company had predicted it would not make today’s payment when bondholders declined to approve a requested extension of maturity at a meeting on March 1.
   “However, the situation is being managed systematically in line with the schedule of HMM’s recovery plans,” said the statement issued for Hyundai today. “Currently, HMM is setting up a specific debt restructuring plan with its creditor banks after entering into a voluntary agreement. HMM is planning to hold additional bondholders meetings in June for all public bonds including the bonds maturing in April to get bondholders’ consent on the proposed debt restructuring plan. When bondholders agree to HMM’s debt restructuring plan, the overdue payment issue is expected to be resolved.”
   “The proceeds from selling its dry bulk dedicated business, stakes in Pusan New-Port Terminal and Hyundai Securities will be used only for fueling the normalization of the company’s business, not for the repayment of the debts,” it added. “This is because securing HMM’s stable operation is the most vital mission for the company to remain viable under the current unprecedented sluggish maritime market condition.
   “HMM’s continuous efforts including charter negotiation and debt restructuring can be paid off when its operation becomes stable, and once all the plans are completed HMM will revitalize itself as a competitive liner once again.”
   HMM said the Korea Development Bank sent a financial management team to HMM on April 4, and the team is closely monitoring the company’s liquidity status.
   “The voluntary agreement with KDB is a conditional arrangement subject to debt restructuring with all the creditors, including ship owners and bondholders, in a fair manner. That is why we ask all stakeholders of HMM to share the burden on a fair and equitable basis,” an HMM official said.