Korea Development Bank (KDB) and Korea Ocean Business Corporation announced on Feb. 7 that negotiations on the sale of Korean container shipping company HMM have been held with a consortium of Harim Group’s Pan Ocean and JKL as a preferred bidder, but their meeting finally ended empty-handed.
“During the seven-week negotiation period, we worked in good faith with mutual trust, but the negotiations were finally terminated due to disagreements on some points,” the seller side said.
The two sides had originally had a deadline of Jan. 23 which was extended once to Feb. 6.
The talks, which had been stalled, reportedly took a sharp turn when Harim withdrew many of its demands, but failed to resolve differences over details.
Harim’s demands included limiting the validity of the shareholders’ agreement to five years and granting an exception to a deadline for private equity firm JKL Partners to sell its stake in the consortium, which the seller did not accept.
Harim also requested a three-year moratorium on the conversion of the remaining perpetual bonds held by the seller but withdrew the request over the objection of the seller.
With the deal falling apart, KDB and Korea Ocean Business Corporation will retain a 57.9 percent stake in HMM.
In addition to the shares, the two companies also hold perpetual bonds worth 1.68 trillion won that are due for call options this year and next.
Industry observers believe that it will be difficult for KDB and Korea Ocean Business Corporation to resell HMM in the short term as many uncertainties are facing the shipping industry.