By Kyunghee Park
(Bloomberg) — Hyundai Merchant Marine Co. will join the world’s biggest shipping alliance, meeting all conditions imposed by creditors as the company seeks to reduce debt after years of weak global demand caused losses.
Hyundai Merchant will join a grouping known as 2M starting April next year, the Seoul-based company said in an e-mailed statement Thursday. The group, led by A.P. Moeller-Maersk A/S and Mediterranean Shipping Co., will seek approval from relevant authorities for the partnership, it said.
The company and bigger rival Hanjin Shipping Co. are among liners worldwide that are undertaking debt reforms and asset sales to boost their balance sheets as they face depressed freight rates amid overcapacity. Hyundai Merchant will sell 280 million new shares to shareholders, creditors, bondholders and shipowners as part of a debt-for-equity swap to cut its debt ratio from 5,309 percent at the end of March.
“Now that all conditions have been met, creditors plan to carry out the debt-restructuring plan,” Korea Development Bank, Hyundai Merchant’s main creditor and biggest shareholder, said in a separate statement Thursday. “Through the restructuring, the company will be able to cut its debt-to-equity ratio to below 400 percent and improve its cash flow.”
Shares of Hyundai Merchant fell 1.9 percent to close at 12,850 won in Seoul trading before the company issued the statement. The stock has dropped 56 percent this year, the third-worst performer on the benchmark Kospi index.
Joining the alliance will help Hyundai Merchant reduce costs and improve its competitiveness, the shipping company has said. It will also enable Maersk and Mediterranean Shipping to bolster their services on trans-Pacific routes.
Hyundai Merchant plans to complete the new share sale later this month after Hyundai Group’s shareholding is cut through capital reduction.
© 2016 Bloomberg L.P
Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.
Join the 108,948 members that receive our newsletter.
Have a news tip? Let us know.
Panama's President Jose Raul Mulino responded "be serious, be serious" on Wednesday when asked in Davos whether he was concerned the U.S. would invade after President Donald Trump said he would take back the Panama Canal.
WASHINGTON, Jan 21 (Reuters) – The Trump administration has fired U.S. Coast Guard Commandant Admiral Linda Lee Fagan, the first female uniformed leader of an Armed Forces branch, for putting diversity issues over border security,...
HELSINKI, Jan 16 (Reuters) – The Eagle S tanker seized by Finnish authorities on suspicion of ripping up subsea cables will not face a separate criminal investigation into whether its fuel cargo violates sanctions...
Maritime and offshore news trusted by our 108,948 members delivered daily straight to your inbox.
Essential news coupled with the finest maritime content sourced from across the globe.
Sign Up
Join The Club
