Are HMM's creditors at odds over Harim's takeover?

HMM’s two largest shareholders appear to have differing views on the selection of Harim Group as the preferred bidder to acquire the nation’s largest container shipping company, amid growing skepticism about the poultry processor’s plan to raise 6.4 trillion won ($5 billion) for the takeover, according to industry officials, Sunday.

Last Tuesday, Oceans and Fisheries Minister nominee Kang Do-hyung told lawmakers in a confirmation hearing that he would thoroughly check Harim’s eligibility from scratch, once he takes office. The ministry supervises Korea Oceans Business Corp. (KOBC), HMM’s second-largest shareholder with a 28.68 percent stake.

“There should be no winner’s curse,” Kang said in response to concerns among lawmakers over Harim’s capability to manage HMM. The incumbent minister has also emphasized that the government wants a buyer that can enable HMM’s sustainable growth.

In contrast, Kang Seog-hoon, chairman of the Korea Development Bank (KDB), which is HMM’s largest shareholder with a 29.2 percent stake, told a local news outlet last Thursday that the deal will be closed without problems.

Their different stances sparked speculation that KDB wants even more examples of itself reconstructing cash-strapped companies, while the oceans ministry fears the role of KOBC as being ambiguous, although KOBC explained that its work related to the HMM account is only a small proportion of its entire business.

The ministry is also said to have expressed concerns over possible consequences of Harim’s takeover of HMM on the Korean shipping industry, but failed to convince KDB and the Financial Services Commission, both of which make their decisions from a financial perspective.

Before the procedure began earlier this year for HMM’s privatization, the ministry apparently had a lukewarm attitude toward the state-run bank’s attempts to look for the shipping firm’s new owner.

“When KDB decided to liquidate Hanjin Shipping in 2017, the oceans ministry also failed to convince the bank to save the company for the Korean shipping industry’s competitiveness,” a government source familiar with this issue said on condition of anonymity. “There was also a rumor that the KDB chairman’s close relations with President Yoon Suk Yeol expedited HMM’s privatization.”

The KDB chairman served as the president’s economic adviser during his election campaign.

Amid the lingering concerns, Harim dismissed worries about its plan to raise money for the acquisition. However, unionized workers of HMM are still protesting the deal, claiming that Harim is just aiming at the shipping firm’s cashable assets worth 10 trillion won.

“HMM is Korea’s only shipping company that can compete with global firms, so the sellers and the government must reconsider the sale procedure from scratch,” the HMM union said.