Debt extension for Hyundai Merchant

SINGAPORE: Hyundai Merchant Marine Co, South Korea’s second-biggest container-shipping line, won more time from lenders to raise funds to repay 1.2 trillion won (US$1bil) of debt as the cash-strapped company negotiates to get out of a financial crisis.

Korea Development Bank (KDB) and other creditors including Woori Bank agreed to extend the maturity of Hyundai Merchant’s debt by three months starting yesterday, the state-owned lender said in an e-mailed statement. The shipping line needed to convince bondholders and shipowners to join the restructuring plan, the lender said.

Hyundai Merchant, which posted losses in five of the past seven years, has been selling assets to reduce debt that had ballooned to almost 800% of its equity. Shipping lines worldwide have also been cutting workers and considering consolidation to stem losses as years of slowing global trade and overcapacity bring down transportation rates.

The creditors would end any support to Hyundai Merchant if the company failed to convince other stakeholders to join in the revival efforts, KDB said.

The banks’ decision would help the company’s efforts to cut charter rates and talks with bondholders, Hyundai Merchant said in an e-mailed statement.

Shares of Hyundai Merchant gained 2.4% to close at 2,340 won before the announcement yesterday. The stock dropped 74% in the past year, compared with a 1.7% decline in the benchmark Kospi index.

The company received 100 billion won in funds earlier this year, including 30 billion won from chairwoman Hyun Jeong Eun, to shore up its finances. It’s also is in talks to reduce charter rates on vessels leased from shipowners to cut costs.

As part of its fund-raising efforts since December 2013, Hyundai Merchant agreed to sell its stake in Hyundai Pusan New-Port Terminal in South Korea to Singapore’s PSA International Pte Ltd, logistics business to Orix Corp of Japan and liquefied natural gas shipping business to a South Korean equity fund. — Bloomberg