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Hyundai Merchant joins world's largest shipping alliance

All News 16:13 July 14, 2016

SEOUL, July 14 (Yonhap) -- Financially troubled Hyundai Merchant Marine Co. has become a member of the world's largest shipping alliance, 2M, meeting all prerequisites set by its creditors to avert court receivership, the shipper's main creditor said Thursday.

In April, its creditors, led by the state-run Korea Development Bank, approved the shipper's restructuring plan in return for the company meeting three key conditions -- a debt recast, a charter rate cut and inclusion in a global shipping alliance.

Earlier, Hyundai Merchant said its talks to be part of the world's largest shipping alliance, 2M, led by AP Moeller-Maersk A/S and Mediterranean Shipping Co., have made significant progress.

KDB said it has signed a memorandum of understanding with the global shipping alliance, adding that Hyundai Merchant will be able to operate under the alliance starting in April next year, if things go smooth.

Hyundai Merchant has reached an agreement with owners of its chartered ships to cut leasing rates by slightly over 20 percent.

Also, bondholders of Hyundai Merchant Marine approved an 804.2 billion-won debt rescheduling proposal, under which more than half of its debt will be swapped for the shipper's stocks and the remaining debt will be paid back in two years.

The creditors also agreed to swap 680 billion won worth of debt for the shipper's stocks as part of an effort to keep it afloat.

Meanwhile, the shipper proposed selling stocks worth 2.49 trillion won (US$2.16 billion) this month, which includes 1.9 trillion won worth of debt-for-equity swap.

Of the proposed amount, some 1.9 trillion won, or 76 percent, is part of a debt rescheduling scheme agreed upon with creditors, bondholders and the owners of chartered fleet.

After the stock sale, the state-run Korea Development Bank-led creditors will emerge as the No. 1 shareholder in the shipping line with some 40 percent.

Hyundai Merchant closed at 12,850 won on the Seoul bourse, down 1.91 percent from the previous session's close, while the benchmark KOSPI edged up 0.16 percent.


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