Hyundai Group desperate to revive shipping unit
By Lee Hyo-sik
Hyun Jeong-eun, Hyundai Group Chairwoman
Hyundai Group is desperate to revive its holding company Hyundai Merchant Marine (HMM), a shipping firm struggling under a 7 trillion won ($5.8 billion) debt amid the worldwide shipping industry slump.
Korea’s 21st largest family-controlled conglomerate, which is widely known for its now-defunct North Korea tourism project, has pledged to do everything it can to raise cash to bolster HMM’s deteriorating bottom line.
In return, it is asking the state-run Korea Development Bank (KDB) and other creditors to extend HMM’s maturing loans and inject fresh capital into Korea’s largest shipper, hit by sluggish cross-border trade.
In a bid to impress creditors, Hyundai Group Chairwoman Hyun Jeong-eun has vowed to donate her personal funds to HMM. Hyundai Group said it will push ahead with the sale of Hyundai Securities again, and dispose of its stakes in port facilities and other assets.
The group said Monday that it submitted an extensive self-rescue plan to KDB and other creditors on Jan. 29.
“We will begin negotiations with creditors over our self-rescue measures this week,” said a Hyundai Group official. “We will try to reach a consensus with the banks as soon as possible to facilitate the normalization of HMM.”
The group expects creditors will extend the shipper’s maturing loans and inject new capital into the company through a debt-to-equity swap scheme.
HMM has to deal with maturing corporate bonds worth 221 billion won due in April. In July, it will also face maturing loans valued at 300 billion won.
In 2013, Hyundai Group announced self-rescue measures to raise 3.3 trillion won by disposing of its profitable subsidiaries and non-essential assets to save the struggling shipper.
Things had initially proceeded smoothly but its rescue plan hit a snag last year when it failed to sell Hyundai Securities to the Japanese financial firm Orix. Had the sale been successful, the group would have secured more than 600 billion won.
Over the past year, HMM has been unloading its stakes in Hyundai Elevator and other group units and non-core assets, raising tens of billions of won. But the amount was not enough to avert its worsening debt crisis.
Under Hyundai Group’s latest self-revival plan, Chairwoman Hyun is widely expected to borrow some 20 billion won from banks by putting up her stakes in Hyundai Elevator and other group units as collateral. She will likely use the money to pay back some of HMM’s debts.
The shipping firm has selected Port of Singapore Authority International (PSA) as the preferred bidder to dispose of its majority stake in the Busan New Port. The company wants to receive more than 500 billion won for its stake. But the price tag will be finalized when PSA completes its due diligence later this month, it said.
In addition, HMM has been trying to sell its bulk carrier business to Hahn & Company, a private equity fund, for 600 billion won.