Hyundai and Korean Development Bank speed plan to restore HMM's health
HYUNDAI Merchant Marine (HMM), South Korea's second-biggest shipping company, and No 15 worldwide, plans to write down its capital by 86 per cent after losses mounted from excess capacity, and weak global demand led to a plunge in shipping rates.
HMM will reduce its capital to KRW173.2 billion (US$143 million) from KRW1.2 trillion as of April 21 to help improve its balance sheet, the company said in a regulatory filing, reports Bloomberg News.
Trading of Hyundai Merchant shares will be halted from April 20 to May 4, and will resume May 6, the company said in a statement to the stock exchange in Seoul.
These are elements an accelerating recovery programme to meet the exigencies of HMM's liquidity crisis which include the sales of Hyundai Securities, its bulk business augmented by personal donations.
"All our plans for HMM's recovery are on the right track and likely to be completed within March if there are no conflicting variables," said a Hyundai Group statement.
Korean Development Bank chairman and CEO Lee Dong-geol told a press conference that the bank concurs with HMM's restructuring plan.
Moreover, he told the press on February 18 that the bank will fully support HMM once satisfactory ship charter termination terms are secured from foreign shipowners.
Charter cut negotiations began February 22 with a goal to complete talks by mid-March at which time a creditors' meeting will be held.
So far, revenues from sales total KRW540 billion (US$449.6 million) including liability of KRW420 billion. On February 18, HMM made a public posting saying that Hyundai Group chairwoman Hyun Jeong-eun will donate KRW30 billion of her personal funds through a third-party allotment.
Competition for the same of Hyundai Group's three financial affiliates including Hyundai Securities, is intensifying in comparison to last year's M&A attempt, fuelling the high expectations around the HMM plan, said the company.
It is rare to find such large financial companies in the M&A market, and the management rights can be obtained by acquiring only 22.56 per cent of the stakes.
Korea Investment Holdings and KB Financial Group have already submitted a letter of intent and are now conducting due diligence.
"Additionally, major local securities, financial groups and foreign strategic investors are reportedly joining hands with Korean PEFs [private equity funds] to take part in the M&A race," said the company statement.
Once the submission of letter of intent was completed on February 29, Hyundai Group proceeded with the main bidding and expects to complete talks with its preferred bidder before April.
"Talks around the charter cut and publicly placed bonds, which are the core factors of recovering HMM's profitability, are also accelerating." said the company.
A negotiating team from HMM and the company's legal advisor Millstein & Co had started talks with shipowners on February 22.
Renegotiations of publicly placed bonds will start soon, said HMM with letters to creditors who hold KRW120 billion in such securities due in April being sent this week.
These letters will seek agreement to renegotiate its liabilities with creditors at a creditors?meeting, which is planned to be held mid-March.
HMM's creditors including Korea Development Bank have publicly stated that they will cooperate in modifying HMM's debt if the agreements on publicly placed bonds and the charter cut are completed successfully.
"Thus, Hyundai Group is putting in all its efforts to make this a success. As part of its plan, Hyundai Group's negotiation to sell 50 per cent plus one of Hyundai Busan New Port Terminal's stakes is expected to be concluded soon," said the company statement.
Said the bank chairman, Mr Lee: "I agree that the implementation of HMM 's restructuring plan is prudent and feasible in the goal of maximising the recovery of the company and all stakeholders."
He said that the bank will proceed with debt-equity swap worth KRW800 billion once HMM successfully concludes its charter cut negotiations.
Oceans and Fisheries Minister Kim Young-suk said he supports HMM's decision to go with the plan despite the sluggish market condition of the maritime industry caused by the global economic downturn.
He then signalled that his ministry will introduce a series of support programmes once recovery could be seen.
HYUNDAI Merchant Marine (HMM), South Korea's second-biggest shipping company, and No 15 worldwide, plans to write down its capital by 86 per cent after losses mounted from excess capacity, and weak global demand led to a plunge in shipping rates.
HMM will reduce its capital to KRW173.2 billion (US$143 million) from KRW1.2 trillion as of April 21 to help improve its balance sheet, the company said in a regulatory filing, reports Bloomberg News.
Trading of Hyundai Merchant shares will be halted from April 20 to May 4, and will resume May 6, the company said in a statement to the stock exchange in Seoul.
These are elements an accelerating recovery programme to meet the exigencies of HMM's liquidity crisis which include the sales of Hyundai Securities, its bulk business augmented by personal donations.
"All our plans for HMM's recovery are on the right track and likely to be completed within March if there are no conflicting variables," said a Hyundai Group statement.
Korean Development Bank chairman and CEO Lee Dong-geol told a press conference that the bank concurs with HMM's restructuring plan.
Moreover, he told the press on February 18 that the bank will fully support HMM once satisfactory ship charter termination terms are secured from foreign shipowners.
Charter cut negotiations began February 22 with a goal to complete talks by mid-March at which time a creditors' meeting will be held.
So far, revenues from sales total KRW540 billion (US$449.6 million) including liability of KRW420 billion. On February 18, HMM made a public posting saying that Hyundai Group chairwoman Hyun Jeong-eun will donate KRW30 billion of her personal funds through a third-party allotment.
Competition for the same of Hyundai Group's three financial affiliates including Hyundai Securities, is intensifying in comparison to last year's M&A attempt, fuelling the high expectations around the HMM plan, said the company.
It is rare to find such large financial companies in the M&A market, and the management rights can be obtained by acquiring only 22.56 per cent of the stakes.
Korea Investment Holdings and KB Financial Group have already submitted a letter of intent and are now conducting due diligence.
"Additionally, major local securities, financial groups and foreign strategic investors are reportedly joining hands with Korean PEFs [private equity funds] to take part in the M&A race," said the company statement.
Once the submission of letter of intent was completed on February 29, Hyundai Group proceeded with the main bidding and expects to complete talks with its preferred bidder before April.
"Talks around the charter cut and publicly placed bonds, which are the core factors of recovering HMM's profitability, are also accelerating." said the company.
A negotiating team from HMM and the company's legal advisor Millstein & Co had started talks with shipowners on February 22.
Renegotiations of publicly placed bonds will start soon, said HMM with letters to creditors who hold KRW120 billion in such securities due in April being sent this week.
These letters will seek agreement to renegotiate its liabilities with creditors at a creditors?meeting, which is planned to be held mid-March.
HMM's creditors including Korea Development Bank have publicly stated that they will cooperate in modifying HMM's debt if the agreements on publicly placed bonds and the charter cut are completed successfully.
"Thus, Hyundai Group is putting in all its efforts to make this a success. As part of its plan, Hyundai Group's negotiation to sell 50 per cent plus one of Hyundai Busan New Port Terminal's stakes is expected to be concluded soon," said the company statement.
Said the bank chairman, Mr Lee: "I agree that the implementation of HMM 's restructuring plan is prudent and feasible in the goal of maximising the recovery of the company and all stakeholders."
He said that the bank will proceed with debt-equity swap worth KRW800 billion once HMM successfully concludes its charter cut negotiations.
Oceans and Fisheries Minister Kim Young-suk said he supports HMM's decision to go with the plan despite the sluggish market condition of the maritime industry caused by the global economic downturn.
He then signalled that his ministry will introduce a series of support programmes once recovery could be seen.