The South Korean government is readying to inject 800 billion won ($706 million) into Hyundai Merchant Marine Co. (HMM) to help the container carrier to get back on track and grow bigger as a world-class shipper.
According to Korea Ocean Business Corp and Korea Development Bank on Saturday, the Korean government is discussing measures to inject 800 billion won into HMM by the end of this year so that the shipper can use the fund to beef up its business such as securing large container carriers and increasing its stake in Hyundai Pusan New-Port Terminal Co.
It is reported that the government will most likely make the investment by having Korea Ocean Business, a state entity launched in July to support local ailing shipping industry, and HMM’s main creditor state-owned Korea Development Bank to purchase 400 billion won worth perpetual bonds each from the shipper. HMM is yet to issue the bonds.
An unnamed official from Korea Ocean Business said the amount and other details of the aid are still under discussion but the government will soon make the announcement.
HMM sees it needs to bump up its cargo carrying capacity to at least 1 million twenty-foot equivalent units (TEUs) to strongly compete against global rivals. For this strategy, it has planned to secure 20 eco-friendly very-large container vessels, increase its share in Hyundai Pusan New-Port Terminal, and buy 1.5 million new containers over the next five years.
In late September, HMM gained an approval from its board of directors for its plan of investing total 3.15 trillion won on 20 very-large container vessel orders placed with the country’s top three shipbuilders. The shipper is expected to cover the cost with the government’s special aid.
HMM has been groomed to be the country’s No. 1 container shipper by the government after Hanjin Shipping bankrupted in 2016. It was saved through the government’s bailout program and its main creditor is Korea Development Bank with a 13.2 percent stake.
By Kim Dong-eun and Cho Jeehyun
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]