State-backed firm to help improve Hyundai Merchant's financial status

Published : Feb 14, 2017 - 17:10 Updated : Feb 14, 2017 - 17:10

A state-backed ship financing firm will buy stocks and debts to be sold by Hyundai Merchant Co., a major shipping firm here, as part of efforts to help jack up its financial status, a senior financial regulator said Tuesday.

Korea Shipping Co. was established this month with an initial capital of 1 trillion won ($878 million) to help local shipping lines buy new vessels.

(Yonhap)

The measures aim to support local shipping firms, as well as shipbuilders, struggling with falling new orders and mounting losses.

"Korea Shipping will provide some 720 billion won to Hyundai Merchant this month or next month to shore up its capital base," Sohn Byung-doo, a standing member of the Financial Services Commission, the country's financial regulator, told reporters.

Some 150 billion won will be earmarked to buy Hyundai Merchant stocks, with the remaining to be used to buy debts convertible into the shipper's stocks.

The official also said the state-backed firm will buy some 10 container vessels operated by Hyundai Merchant, and lease them back to the shipper.

Separately, Hyundai Merchant will place orders for five container vessels and two or three oil tankers later this year with the state-backed financing program.

Last year, the government has vowed to support the local shipping industry as Hanjin Shipping Co., the country's No. 1 shipping firm, was put under court receivership in September with heavy debts.

Daewoo Shipbuilding & Marine Engineering Co. and other local shipyards have been suffering from a sharp drop in new orders, massive losses stemming from a delay in the construction of offshore facilities and increased costs. (Yonhap)