State-backed firm vows to help prop up HMM

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State-backed firm vows to help prop up HMM

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

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

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

“Korea Shipping will provide some 720 billion won to Hyundai Merchant Marine this month or next month to shore up its capital base,” Sohn Byung-doo, a standing member of the Financial Services Commission, said.

Some 150 billion won will be earmarked to buy Hyundai Merchant Marine 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 around 10 container vessels operated by Hyundai Merchant Marine and lease them back to the shipping line. Separately, Hyundai Merchant Marine 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 vowed to support the local shipping industry as Hanjin Shipping, the country’s largest container line, was placed under court receivership in September with heavy debt.

Daewoo Shipbuilding and Marine Engineering 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
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