Hyundai Merchant Marine Co. (HMM), South Korea’s second-largest container carrier, was given another month to meet all the obligations creditors laid out in order to receive reprieve under their management instead of heading toward court receivership.
An unnamed high-level official from the financial authority said that the deadline for the financially-troubled shipper to fulfill conditions to receive creditor debt relief has been extended by a month from June 28 to July 28.
Multiple industry sources note that the deadline has been renewed to allow Hyundai Merchant Marine gain more time to join THE Alliance, a newly formed maritime group. Rejoining a multinational alliance was one of the three conditions creditors had asked the shipper for it to be under debt relief program and custodianship. Hyundai Merchant Marine has managed to satisfy two other conditions that involved moderating chartering fees and rescheduling debt with creditors and bondholders.
THE Alliance is formed of six global shipping companies – Hanjin Shipping Co., another troubled shipper, Hapag-Lloyd AG, Nippon Yusen Kaisha Line (NYK), Mitsui O.S.K. Lines Ltd. (MOL), Yang Ming Marine Transport Corp., and “K” Line. For Hyundai Merchant Marine to be included in THE Alliance, it needs to receive consent from all six members. The Korean container carrier had been known to be on track to join the newly formed alliance until recently when conditions changed.
A senior official from Hanjin Shipping who asked to be unnamed said that three members of THE Alliance – Hapag-Lloyd AG, NYK, and MOL – that were known to be in favor of Hyundai Merchant Marine joining as a new member have turned back. An unnamed official from Hyundai Merchant Marine also said that it hasn’t received any response from THE Alliance and that although opposing shippers remain unmoved, it will do its best to receive their consent.
An unnamed official from the shipping industry said that global container carriers seem to prefer Hanjin Shipping to remain as a member of THE Alliance as it is operationally bigger than Hyundai Merchant Marine. The official added that they seem to think that it would be most favorable to them to wait until early August when a rescue decision is made on Hanjin Shipping before making their final decisions on Hyundai Merchant Marine.
Sources note that Yang Ming and “K” Line are willing to give Hyundai Merchant Marine consent if Hanjin Shipping allows them to. Hanjin Shipping, on the other hand, is willing to invite its local rival in should the other members agree.
The fate of Hyundai Merchant Marine is expected to be decided no later than early next month. If it fails to join THE Alliance, it will most likely head to court receivership unless creditors dramatically allow the shipper to be under debt relief program even without alliance to an international trade line.