Hyundai Merchant's debt-for-equity swap gets conditional green light

By Park Sae-jin Posted : May 24, 2016, 18:12 Updated : May 24, 2016, 18:12

[Yonhap News Photo]


Hyundai Merchant Marine was allowed Tuesday to turn an unspecified amount of debt into equity under a debt rescheduling program approved by South Korean creditors as the country's second largest container carrier was involved in tough talks with foreign ship owners.

The debt-for-equity swap, which is reportedly worth some 700 billion won ($588 million), will be null and void if Hyundai Merchant and foreign shipowners fail to reach an agreement, its key creditor Korea Development Bank said.

Initially, Hyundai Merchant had been required to wrap up negotiations on lowering rates on leased vessels by the end of last week. But the deadline was extended to help the two sides accelerate negotiations that began in Seoul last Wednesday. Financial regulators have warned that a failure in talks means court receivership.

The company has been the first serious target of creditor-led restructuring that could change the picture of the world's shipping industry hit by falling freight rates. A prolonged slump in global trade and overcapacity have depressed transportation rates, causing shipping lines to stem losses through job cuts and consolidation.

Hyundai Merchant has been left out of a new global shipping alliance formed by six Asian and European container-shipping operators last week to challenge the dominance of global giants such as Maersk Line and Mediterranean Shipping Co.

Hyundai Merchant dropped out apparently due to uncertainty caused by delayed negotiations with ship owners. Hanjin Shipping was included in the alliance, though it was also put under a creditor-led restructuring plan.

Aju News Lim Chang-won = cwlim34@ajunews.com 
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