‘Cut charter fees, or face court receivership’

Korea’s top financial regulator said Friday that regardless of the deadline, Hyundai Merchant Marine should seek to continue negotiations to reduce charter fees with foreign shipowners, hinting at giving the ailing shipper more time to settle deals.

Speaking to reporters after a meeting with regional bankers, Financial Services Commission Yim Jong-yong said, however, that if negotiations are not successful, HMM will be put under court receivership.

The government had initially given the shipper until May 20 to negotiate with its shipowners to lower the leasing costs by as much as 30 percent. Otherwise, it said it will not be able to bail out the company through debt restructuring and maturity extension.

“If it fails to negotiate, it will be put under court receivership,” Yim told reporters.

The FSC added in a statement with the state-run Korea Development Bank -- HMM’s creditor bank -- that the shipper is currently negotiating with four owners of its chartered ships, and along with the policy bank it will aim to resolve the issue as soon as possible.

“We seek to conclude the negotiations in the shortest time possible as holding off the talks will only delay restructuring,” KDB said in a statement.

Numerous reports indicated that HMM is facing difficulties in the negotiations, with the risk running high for the shipping giant to file for bankruptcy.

The government has been adamant in its stance over HMM as Finance Minister Yoo Il-ho also mentioned a day earlier that it has no option but to be placed in receivership should it fail to meet its demand by the deadline.

Yim added that without the charter fee reduction, it would be hard to normalize the company through a relief package.

The government and the central bank are also seeking to narrow their differences on ways to recapitalize policy banks including the Export-Import Bank of Korea.

The FSC said that they are in an agreement over the basic framework for bank recapitalization, and that they just need to further discuss on ways for the central bank to secure collaterals in exchange for providing loans through a fund to the banks.

“We just need to work out the technicalities, and in principle, we do not have any disagreements,” Yim said.

By Park Hyong-ki (hkp@heraldcorp.com)