Hyundai Merchant Marine (HMM) is expected to join a new global shipping alliance, as the cash-strapped shipper has successfully reached a debt-rescheduling deal with its bondholders.

According to a government official, Wednesday, key members of THE Alliance said they will support HMM’s membership application. Since the shipper successfully cleared a hurdle of debt adjustment negotiations with its bondholders, HMM’s entrance to THE Alliance is expected to be just a matter of time, he added.

Joining THE Alliance was one of many prerequisite hurdles for HMM in normalizing its operations and business along with debt rescheduling and cutting charter fees paid to ship owners.

“Members of THE Alliance said they will help HMM’s induction once we regained our financial health,” said an HMM official.

Hyundai Merchant Marine approved to join new shipping alliance

HMM had been a member of the G6 shipping alliance, but wasn’t included when the G6 formed THE Alliance, due to its poor financial status.
Since membership in global shipping alliances is a necessity for major shippers in global marketing, HMM has focused on negotiating with THE Alliance regarding its prospective membership.

Key member shippers, including MOL, NYK Line and Hapag-Lloyd, suggested that they will approve the cash-strapped shipper’s membership once its financial status recovers, and HMM has discussed with creditors rescheduling all of its publicly placed bonds worth 804.2 billion won.

On Tuesday, the company’s creditors, including the Korea Development Bank, agreed to renegotiate the extension of debts worth 630 billion won that are due this and next year as well as a debt-for-equity swap.

Under the agreement, 50 percent of the bonds will be converted into equity while the remaining 50 percent will be paid in installments over three years after a two-year grace period. The interest rate would be lowered to 1 percent from the current annual rate of 5 to 6 percent.

Given HMM has almost completed talks with ship owners on cutting charter rates, it seems the company has cleared the most difficult hurdles to avoid liquidation.

HMM’s shares skyrocketed to 18,000 won, following a four-day rally on the bondholders’ approval and expectations that the shipper would also reach a deal with ship owners soon.

Source: Korea Times