Korea Shipping to Buy Up to 10 HMM Vessels
The state-backed ship financing company Korea Shipping is looking to buy up to ten container vessels operated by Hyundai Merchant Marine (HMM), and lease them back to the shipping firm.
The financing company, which was established in January 2017 to help local shippers and shipbuilders amid a lengthy depression seen by the industry, would also purchase HMM’s stocks and debts as the South Korean shipping giant aims to boost its financial position, Yonhap News Agency cited Sohn Byung-doo, a member of the country’s financial regulator Financial Services Commission.
Through these actions, Korea Shipping is expected to provide around KRW 720 billion (USD 633.7 million) of financial support to Hyundai Merchant Marine by the end of March.
It is estimated that around KRW 150 billion would be set aside for the purchase of HMM stocks, while the remaining amount would be used to buy debts convertible into the shipper’s stocks, Yonhap informed.
The move comes on the back of the prolonged shipping woes experienced during 2016, which culminated in the bankruptcy of the South Korean container carrier Hanjin Shipping in late August.
Due to a number of asset sales undertaken in 2016, Hyundai Merchant Marine managed to narrow its net loss for the full year to KRW 4.4 billion from a net loss of KRW 627 billion seen in the previous year, the company earlier said in a stock exchange filing.
Although the shipping firm cut its net loss, the company’s operating loss widened by 198 percent year-on-year as it stood at KRW 833.3 billion at the end of 2016, compared to an operating loss of KRW 279.3 billion reported a year earlier, while its revenue for the period dropped by some 18 percent to KRW 4.58 trillion from KRW 5.64 trillion seen in fiscal year 2015.