Go to Contents Go to Navigation

Regulator hints at possible merger of two major Korean shippers

All News 17:33 June 13, 2016

SEOUL, June 13 (Yonhap) -- South Korea's financial regulator said Monday that creditors may consider a possible merger between Hanjin Shipping Co. and Hyundai Merchant Marine Co. upon completion of their separate restructuring programs.

Under the guidance of their creditor banks, the country's two biggest shipping lines have cut jobs and sold non-core assets in recent years to get their businesses back on track. They have inked heavy losses since the 2008 global economic crisis due to a glut of vessels and low freight rates.

"Creditors will decide on whether to allow the two shipping companies to go on as separate business entities or to merge them together in one company depending on their rehabilitation efforts," Yim Jong-yong, chairman of the Financial Services Commission (FSC), said in a press briefing.

Among others, the FSC chief urged the shipping firms to lower charter rates in talks with shipowners, which is a core condition for a rollover on the loans from their creditor banks.

On June 10, shipowners that charter their container ships to Hyundai Merchant agreed to cut the rates by 21 percent, according to state-run Korea Development Bank (KDB), main creditor for the two shipping firms.

Hyundai Merchant is also required to join an international alliance involving shipping firms to continue its operations.

"Hyundai Merchant has made some achievements. But Hanjin Shipping is in the initial stage of negotiations with shipowners to cut charter rates, its creditors are making further efforts to push its restructuring forward," Yim said.

As for self-rescue plans in the world's three biggest shipbuilders -- Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. (DSME), the chairman said the government and creditor banks will closely monitor whether they complete the plans as promised. KDB is the main creditor of Samsung Heavy and DSME and KEB Hana Bank is the main creditor of Hyundai Heavy.

Last week, creditor banks finally approved self-rescue plans worth a combined 10.35 trillion won (US$8.8 billion) presented by the three shipyards.

Meanwhile, he warned against a possible strike at DSME, saying "it will be difficult to put a debt-laden company back on track without pains shared by lenders, shareholders and union workers."

kyongae.choi@yna.co.kr
(END)

HOME TOP
Send Feedback
How can we improve?
Thanks for your feedback!