Hyundai Merchant Marine is putting all its efforts in last-ditch negotiations with foreign shipowners to cut leasing fees as the heavily indebted shipper is desperate to avoid court receivership.
Korea’s second-largest shipping operator is facing a tentative deadline Friday set by the government, which has threatened to put the firm under court receivership unless it successfully completes negotiations with shipowners to cut charter rates by 28-30 percent.
HMM’s conference call with bulk charterers, previously scheduled for Thursday afternoon, was canceled, one day after the company failed to reach agreements with four owners of containerships -- Navios, Danaos, CCC and EPS -- over charter fees in Seoul.
“Although the conference call has been canceled, negotiations with shipowners are still ongoing,” said HMM spokesman Choi Young-man.
“We hope to conclude the negotiations by next week,” he said.
HMM has a contract with five containership owners and 17 bulk charterers. As for the charter fees, 70 percent is paid to container owners and the rest to bulk charterers.
On Wednesday, leading creditor Korea Development Bank joined HMM and its advisor Millstein & Co. in charter fee negotiations and explained to the four shipowners that creditors’ options to help the shipper are “extremely limited,” should the negotiations fail, KDB said in a statement.
Finance Minister Yoo Il-ho told reporters that the government will go ahead with a court receivership plan if HMM and shipowners fail to agree on cutting charter fees.
Slashing charter fees is just one of the of 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 debts ending this year and next. The bondholders are scheduled to meet on May 31 and June 1 to decide whether to rollover the debts.
If all these go smoothly, 50-60 percent of Hyundai Merchant’s 1.1 trillion won secured debts to financial institutions may be freshly injected to 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 with five other shippers including Germany’s Hapag-Lloyd, Japan’s NYK and Taiwan’s Yang Ming.
HMM was tentatively excluded from the group due to the possibility of going under court receivership, KDB said.
However, if its self-rescue plan goes as per schedule and the debt ratio falls below 200 percent, the shipper is expected to be included in the group, the bank said.
By Kim Yoon-mi (
yoonmi@heraldcorp.com)
