The government will inject one trillion won (US$900 million) in emergency aid into Hyundai Merchant Marine (HMM) to alleviate its financial difficulty.
HMM announced on Oct. 23, that the company would issue 600 billion won (US$540 million) in bonds with warrants (BWs) and 400 billion won (US$360 million) in convertible bonds (CBs). The state-run Korea Development Bank would take over all of the securities.
The KDB plans to sell half of the HMM bonds to Korea Ocean Business Corp. next year.
The government has decided to provide financial support again to HMM as the restructured shipping company has had difficulty normalizing its operations. It posted losses for the 13th consecutive quarter in the second quarter.
HMM plans to use the funds to build 20 large-sized containerships which the company recently ordered, acquire a stake in Hyundai Pusan New-port Terminal (HPNT), purchase containers and pay for operating costs. HMM will pay 315.3 billion won (US$283 million), which is 10% of the 3.153 trillion won (US$2.83 billion) needed to frame the 20 containerships, to the top three Korean shipbuilders within this year, and 164 billion won (US$147 million) should be spent on acquiring the stake in HPNT. The rest will be used for container purchases and company operations.
The Korean government is weighing the size and timing of additional support for HMM, taking the shipping market conditions into account. "We have to watch the shipping market situation as freight charges have been on the decline and oil prices have become more volatile," a government official said. “Our basic principle is that if the shipping market situation improves in the first half of next year, we will raise funds for HMM in the market first. Otherwise, we will begin to give additional support to HMM."