Ready for Support
Hyundai Merchant Marine Co. (HMM), a major shipping line here, will receive fresh funds of 300 billion won (US$256.52 million) from creditors in order to acquire Hanjin Shipping’s assets, including the Long Beach Terminal in California. Korea Development Bank (KDB) has also pledged to provide more funds other than 300 billion won (US$256.52 million) at appropriate times if needed to normalize the company.
HMM held a press conference at the East Wing of the Hyundai Group headquarters in Yeonji-dong, Seoul, on December 12 and announced its plan to improve the company’s medium and long-term competitiveness. The conference was attended by HMM officials including President Yoo Chang-keun and Vice President Kim Choong-hyun and KDB Bank officials such as Vice President Jeong Young-seok and Lee Jong-chul, head of the corporate restructuring division.
HMM President Yoo Chang-keun said, “Creditors plans to provide additional funds of 300 billion won (US$256.52 million) by the end of December to help acquire Hanjin Shipping’s Long Beach Terminal and other assets.” The additional funds will be injected to buy the Long Beach Terminal in the U.S. and a port terminal in Algeciras, Spain, and to make up the shortage in operating funds.
Meanwhile, HMM has joined hands with MSC, the second largest shareholder of the Long Beach Terminal, to acquire the terminal that is required to strengthen the competitiveness of the U.S.-Asia route. However, MSC will be the largest shareholder of the terminal, not HMM.
Vice President Kim Choong-hyun said, “Since there are a lot of provisions unfavorable to Hanjin Shipping in the existing contract, HMM cannot bear the burden when acquiring its 54 percent stake. We needed to reduce the stake in order to get rid of disadvantages. We have agreed to set the same terminal use fees regardless of the percentage of stakes, so there will be no problem with the competitiveness in services.”
In regard to why HMM wasn’t included in the official contract for the Long Beach Terminal, Kim said, “As the stake will be transferred to HMM as soon as the existing deal ends, there is no need to worry whether MSC will change its words.”
Meanwhile, some raised controversy at the press conference over fairness with Hanjin Shipping, which has gone into receivership after the end of the voluntary agreement. Regarding this, KDB Bank attributed the blame to Hanjin Group.
KDB Bank Vice President Jeong Young-seok said, “Any company cannot survive unless it creates profits. Hanjin Shipping made net losses of 6 trillion won (US$5.13 billion) from 2001 to the first half of this year. Creditors kept bringing up Hanjin Shipping’s management crisis from December last year and coming up with its solutions, there was a gap between Hanjin Group’s situational awareness and ours.”
He added, “HMM preemptively sold Hyundai Securities and raised funds, quickly responding to the issue. Considering debenture holders’ meetings to negotiate chartered fees, creditors made the decision.”