Hyundai Merchant Marine Co. has made significant progress in its negotiations with foreign ship owners to bring down chartering payments. The fee reduction rate agreed with five container owners is reaching the Maginot line which can be accepted by creditors, and the final rate will be confirmed according to the decision by bulk charterers later.
As Hyundai Merchant Marine has made the first step to normalize the business, the government and creditors will help the company win orders of ultra large container ships through shipping funds in August so that it can join a shipping alliance group.
“Hyundai Merchant Marine has made remarkable progress in its negotiations with overseas ship owners over charter fee readjustment negotiations. They are expected to reach an agreement in the next few days,” its main creditor Korea Development Bank said in a statement on May 30.
Currently, Hyundai Merchant Marine has reached an agreement on chartering fee readjustment with five container owners, including Danaos of Greece and Zodiac of the U.K., and offered a final proposal under the same conditions with container firms to 17 bulk charterers. The reduction rate for container ship chartering fees is close to the Maginot line which can be accepted by the government and creditors. The Maginot line which can be accepted by the market is little over 20 percent, while the figure by container owners stands at some 19 percent.
As Hyundai Merchant Marine has taken the first step to stabilize the company with negotiations to cut chartering charges, the government and creditors have decided to run shipping funds in earnest in order to help the company join a new global shipping alliance called The Alliance. A senior official from the government said, “When corporate bond debts are settled after the negotiations on chartering fees, Hyundai Merchant Marine can set its debt ratio at 400 percent which is required to receive shipping funds. Accordingly, the company will be able to win three to four orders for 14,000 TEU ships through shipping funds in August first.”