Big progress in HMM's charter fee talks: creditor

Published : May 30, 2016 - 15:06 Updated : May 30, 2016 - 20:08

Heavily indebted shipper Hyundai Merchant Marine has made meaningful progress in its last-ditch negotiations with international ship owners to cut the leasing rates for its chartered ships, its leading creditor said Monday.

“Hyundai Merchant Marine has made remarkable progress in its negotiations with overseas ship owners over charter fee readjustment negotiations,” its main creditor Korea Development Bank said in a statement.

“They are expected to reach an agreement in the next few days,” it said.

(Yonhap)

The KDB said the nation’s No. 2 shipper’s negotiations with five container owners went smoothly and it is awaiting a final decision by 17 bulk charterers. As for the charter fees, 70 percent is paid to container owners and the rest to bulk charterers.

The final results and details about the negotiations will be announced after discussions among creditor banks, KDB said.

Earlier in the day, Financial Services Commission chairman Yim Jong-yong told reporters that the prospects for HMM’s charter fee negotiations have brightened up.

However, he added it would be hard to immediately expect any resolution.

Hurt by the slowing global trade, particularly from falling demand in China, the debt-ridden operator has been negotiating with overseas ship owners to cut fees since February, the outcome of which could affect the ailing firm’s fate.

Industry watchers considered Monday as the deadline for the charter rate talks. HMM is to hold meetings on Tuesday and Wednesday with bondholders -- who are more likely to agree on the rolling over their 800 billion won ($672 million) worth debts if it successfully cuts charter rates in advance.

Slashing charter fees is just one of the conditions that creditors have demanded in exchange for resettlement of HMM’s debts.

The shipper has to persuade nonsecured bondholders -- such as National Agricultural Cooperative Federation’s unions and the National Credit Union Federation of Korea -- to extend the maturity of their debt ending this year and next.

If everything goes smoothly, 50-60 percent of Hyundai Merchant’s 1.1 trillion won secured debts to financial institutions may be freshly injected in the cash-strapped firm through a debt-to-equity swap scheme.

After a debt settlement, HMM hopes to join a new global shipping alliance called The Alliance, which its bigger rival Hanjin Shipping successfully joined last Friday along with five other shippers including Germany’s Hapag-Lloyd, Japan’s NYK and Taiwan’s Yang Ming.

The positive news on HMM’s imminent charter fee negotiations sent its shares to the daily limit of 30 percent rise, to close at 15,850 won on Monday.

By Kim Yoon-mi (yoonmi@heraldcorp.com)