HMM to be 'privatized' if market condition allow for it

Cho Seung-hwan, minister of oceans and fisheries, speaks at a parliamentary hearing on Thursday. [NEWS1]

The Ministry of Oceans and Fisheries said there is a plan to "privatize" HMM but timing will depend on market conditions.

"The shipping industry is stabilizing, and we will consult with related parties, including the Financial Services Commission, to create ideal conditions to privatize HMM," Cho Seung-hwan, minister of oceans and fisheries, told the National Assembly Thursday.

A fisheries ministry-controlled company and the state-owned Korea Development Bank (KDB) are the largest shareholders of the shipper and under certain conditions would become majority owners of the company.

The minister said various factors need to be taken into consideration, such as HMM's total cargo volume. Cho said HMM's current cargo volume is only one-thirds that of the two biggest international shippers, and that the company must become more competitive.

HMM logged revenue of 9.95 trillion won ($7 billion) in the first half, up 87 percent on year. Net profit surged 1,563 percent on year to 6.06 trillion won.

Regarding questions as to whether any private company would be willing to pay the 10 trillion won asking price, the minister said he will "look into the issue."

KDB is the largest shareholder of HMM, with a 20.69 percent stake. Korea Ocean Business Corp., which is under the oceans ministry, has 19.96 percent, and the Korea Credit Guarantee Fund has 5.02 percent, which means 45.67 percent is owned by state-run organizations.

KDB and Korea Ocean Business Corp. also own 2.7 trillion won of HMM perpetual bonds, which would increase their combined stake in HMM to 74.1 percent if the bonds are converted into stock.

Cho said he also acknowledges that "if public institutions get to own 74 percent of the company, it will be an obstacle for privatization." He didn't answer whether the state-run institutions will convert the bonds in the near future, but said they "will have to consider the stock market situation."

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]