Restructuring Tasks Satisfied
Hyundai Merchant Marine announced on July 14 that it signed a memorandum of understanding for joint services with 2M, the largest shipping conference in the world. In doing so, Hyundai Merchant Marine completed its three different restructuring tasks required by creditors, the other two being re-negotiations for charter rate reduction and debt restructuring. According to the memorandum of understanding, 2M and Hyundai Merchant Marine begin to provide their joint services in April 2017 after clearing authorization processes in different countries and completing negotiations on details.
2M has Maersk Line and MSC, the two largest companies in the industry, as its members. 2M’s global market share has increased from 28.5% to 30.4% based on Hyundai Merchant Marine’s accession. At present, the respective market shares of the Ocean Alliance and the THE Alliance are 26.5% and 17.1%. The former includes CMA CGM and COSCO and the latter includes Hanjin Shipping and Hapag-Lloyd.
Hyundai Merchant Marine is expected to be able to reduce costs and achieve an increase in sales by making use of super-large ships of Maersk and MSC. 2M is also expecting that the membership of Hyundai Merchant Marine will be a boon for its service competitiveness in the Asia-Pacific region.
In the meantime, the Hyundai Merchant Marine creditors are to initiate debt-equity swap as previously scheduled with all the conditions for voluntary agreement initiation satisfied. The company’s debt ratio is to fall below 400% once the debt-equity swap is completed by charterers, debenture holders and the creditors. Then, Hyundai Merchant Marine becomes eligible for the South Korean government’s fund for helping out the industry.