Deadline nears with no agreement in sight for HMM sale

The sale of HMM, the nation’s leading container shipper, continues to face a conundrum, as its main creditor and a preferred bidder are showing no signs of narrowing their differences ahead of the negotiation deadline.

The main creditor – led by the Korea Development Bank (KDB) – looks to maintain its position of converting its perpetual bond in HMM worth 1.68 trillion won ($1.25 billion) into equity. Under this scenario, the main creditor will be able to obtain a 32-percent stake in HMM by 2035.

But the Harim-JKL Partners consortium is calling on the main creditor to delay the plan for another three years, as part of a move to raise its influence after acquiring the shipper. Earlier, the consortium agreed to purchase a 58-percent stake in HMM, but it faces a possible stake dilution to around 38 percent unless the creditor reshapes its bond conversion plan.

The consortium will still be able to maintain its status as the largest shareholder for HMM after finalizing the deal, but cannot exercise overwhelming influence with the stake.

Two state-run organizations – KDB and Korean Ocean Business – are still amid last-minute talks with the consortium to reach a final consensus. The deadline for the negotiation falls on Feb. 6.

If both sides fail to conclude the deal as scheduled, the main creditor is expected to open up for another bidding round to find other potential interested parties. Dongwon and LX International are potential candidates, as they have joined the competition to become the preferred bidder for the mega-sized deal.

Chances appear slim that the main creditor will accept the demand from Harim, considering the steep stock growth of HMM. Its shares reached around 16,000 won per share in December, but are now traded at around 20,000 won. KDB has generated more than 2 trillion won in capital gains thanks to the stock growth, so it is unlikely the creditor would give up the gains and receive the principal.