Hyundai Merchant Marine has posted another annual loss today (5 February), dipping KRW443.4 billion (USD377 million) into the red for 2015, a result hardly changed from its KRW465.2 billion shortfall for 2014.
The result also marked a fifth consecutive annual loss for HMM.
The loss impaired more than half of HMM’s capital and resulted in its shareholders’ equity falling 30% year on year to KRW477.6 billion, implying a very high gearing level given liabilities of KRW5.6 trillion, although the company has more than KRW6 trillion worth of assets.
Also today, HMM revealed that the worsening dry bulk market and a global economic slowdown has caused it to call off plans to issue permanent convertible bonds in the name of Hyundai Bulk Line, a recently created entity that acts as a holding company for HMM’s container terminals in the US and the company’s dedicated bulk shipping businesses.
HMM said it will instead now sell these assets, said to include 14 dry bulk ships, to South Korean private equity firm Hahn & Co for USD100 million.
HMM is currently in talks with its creditor banks to restructure debts. It is also said to be in talks with the owners of its chartered-in bulkers and container ships to lower charter rates.
The company announced on 4 February that it has appointed Ernst & Young affiliate EY Han Young to oversee the sale of its 36% stake in Hyundai Securities through an open tender. HMM’s earlier attempt at selling the stake to Japanese financial house Orix fell through last year, when South Korean authorities questioned the sincerity of the sale.
The troubled company has also sold its remaining 33.8% stake in tour operator Hyundai Asan and obtained a short-term loan from another affiliate, Hyundai Elevator.
Chairwoman Hyun Jeong-eun, the widow of Hyundai scion Chong Mong Hun, is reportedly using USD25 million of her personal funds to save HMM, which has been struggling amid structural overcapacity in container and dry bulk shipping.
Hahn & Co in 2014 purchased the dedicated LNG and bulk shipping business of Hanjin Shipping, which had also sought to raise liquidity.
The growing troubles at HMM prompted the South Korean government to ask Hanjin Shipping, which posted a profit for 2015, to consider acquiring its smaller rival. But Hanjin Shipping has said it believes the move is impractical and the government has stressed that any merger would be voluntary.
Source: IHS FairPlay
Source: IHS FairPlay