SEOUL, Feb 12 (Reuters) – Hyundai Merchant Marine plans to sell its liquefied natural gas (LNG) transport business to a local investment firm for 1.1 trillion won ($1.03 billion) as the South Korean shipper continues its search for funds to pay off debt.
Hyundai Merchant Marine is on course to post its third straight year of loss as demand has been weak since the onset of the global economic slowdown. Selling the LNG transport unit is part of parent Hyundai Group’s plan to raise support funds of more than 3.3 trillion won.
Hyundai Group, once affiliated with Hyundai Motor Group, also plans to support South Korea’s second-biggest shipper by market share with the proceeds of selling brokerage Hyundai Securities Co Ltd.
In a statement on Wednesday, Hyundai Merchant Marine said it has chosen IMM Investment Corp as the preferred bidder for the LNG transport business, and that it plans to complete the deal in the first half of this year.
Shares of Hyundai Merchant Marine rose as much as 12 percent after the announcement compared with a benchmark index which inched up 0.4 percent.
The LNG unit, which has provided Hyundai Merchant Marine with stable cash flow, owns 10 vessels and carries nearly 20 percent of South Korea’s annual LNG imports under long-term contracts with state-run Korea Gas Corp.
“The sale… is our best option to restore market confidence, and we will concentrate our efforts to improve competitiveness in containers and bulk carriers going forward,” Hyundai Merchant Marine said in the statement.
An official at IMM Investment was not immediately available for comment.
Separately, Hyundai Merchant Marine’s bigger rival, Hanjin Shipping Co Ltd, plans to sell part of its bulk carrier fleet and other assets to raise half of the 1.53 trillion won it needs to plug losses. ($1 = 1070.8500 Korean won) (Reporting by Hyunjoo Jin and Joyce Lee; Editing by Christopher Cushing)