HMM asks creditors to help stabilize companyHyundai Merchant Marine (HMM) is attempting to get creditors more involved with the company in a bid to save the ailing shipper.
Representatives of the creditors, including the state-run Korea Development Bank, have begun discussions with the company leadership on details of a co-management system.
The company submitted the rescue measure to creditors on Monday with a March 29 deadline, in a bid to put its business back on track.
Prior to the request, Hyun Jeong-eun, chairwoman of HMM’s mother company, Hyundai Group, raised 30 billion won ($26 million) from her personal properties and the group is trying to sell Hyundai Securities.
If an agreement is reached, the two sides will jointly work on improving HMM’s financial structure. Initially, creditors will delay the due date for interest and principal redemption for three months, and work on readjusting the amount of total debt. This will include converting HMM’s debt into equity, which needs creditors’ approval.
“It isn’t a workout, although it looks like one,” an HMM spokesman said. “Today’s meeting was held to discuss how the creditors will adjust the company’s debt.”
It is questionable whether the troubled company will find a breakthrough. Due to the economic crisis in Europe in 2011, the overall global cargo volume significantly dropped, resulting in 357.4 billion won in losses for the company that year, and it has stayed in the red for five consecutive years.
Of its 4.7 trillion won of total debt, 1.8 trillion won was borrowed from financial institutions, including the Korea Development Bank, and the rest was made when it issued corporate bonds.
If the joint management deal is signed, the company will earn some time to repay debt to financial institutions, but it will face troubles when private investors seek repayment on corporate stocks.
High charter costs, where the company currently pays $50,000 a day to ship owners, contributed to the company’s huge losses. The deal was made when the industry was booming in the past, although the average cost has been lowered to $8,000 per day.
“We are making some progress in negotiations with ship owners,” an HMM spokesman said. “This negotiation is important because it could show private investors that we have a chance at revival. We expect to make some results next month, and it will help us persuade private creditors to approve the debt-equity swap.”
BY KWON SANG-SOO [firstname.lastname@example.org]
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