HMM's acquisition of Hyundai LNG Shipping in major doubt

Hyundai LNG Shipping's gas carrier, HLS Diamond [HYUNDAI LNG SHIPPING]

HMM's attempt to acquire Hyundai LNG Shipping is at risk of falling through over a bid price disagreement.

"We will explore alternative options and seek out interested buyers as the deadline for Hyundai LNG Shipping's acquisition finance has been extended," a spokesperson for IMM Private Equity (PE), which oversees the sale, told the Korea JoongAng Daily on Thursday.

The IMM consortium — led by IMM PE and its affiliate IMM Investment — holds a controlling stake of 79.23 percent in Hyundai LNG Shipping, the country's largest domestic liquefied natural gas (LNG) shipping company, which is valued at up to 460 billion won ($344.4 million).

HMM, Korea's largest container shipper, submitted its tender proposal on Sunday. The company, formerly known as Hyundai Merchant Marine, previously owned Hyundai LNG Shipping, but faced financial difficulties and subsequently sold its LNG shipping unit to IMM PE in 2014 for around 500 billion won. HMM's offered acquisition price was reportedly around 300 billion won. However, a notable discrepancy between HMM's bid and the demand of the IMM consortium, based on their previous investment in 2014, resulted in a decision to not proceed with the sale, according to news reports.

To accommodate the acquisition finances for Hyundai LNG Shipping, the IMM consortium extended the deadline by one year, the private equity investment firm confirmed. The original deadline was set for June 27. Yet IMM PE declined to comment on whether the extension pertains to HMM.

HMM, in response, said they have not received any official notice from the IMM regarding the decline. The company refrained from providing further comments on the matter.

Consequently, the chances of Hyundai LNG Shipping being sold to a foreign buyer have increased, as HMM is unlikely to return with a fresh bid. Four foreign companies — from the United States, Britain, Greece and Denmark — have made it to the shortlist of potential buyers, but also proposed low bid prices.

The government and the maritime industry expressed concerns about the potential foreign control of the nation's largest domestic liquefied natural gas shipping company. The government views the foreign ownership of a flagship carrier's LNG transportation as a risk in emergency situations.

"There is a substantial difference in the bid price desired by the seller and the potential buyer," commented an industry insider. "Along with the aging vessels owned by Hyundai LNG Shipping, it is doubtful whether it is appropriate to fulfill the IMM consortium's requested amount."

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]