Hyundai Merchant to Join Maersk Alliance
Hyundai Merchant Marine Co. will join the world’s biggest shipping alliance, meeting all conditions imposed by creditors as the company seeks to reduce debt after years of weak global demand caused losses.
Hyundai Merchant will join a grouping known as 2M starting next April, the Seoul-based company announced in an e-mailed statement. The group, led by A.P. Moeller-Maersk A/S and Mediterranean Shipping Co., will seek approval from relevant authorities for the partnership, it said.
The company and bigger rival Hanjin Shipping Co. are among liners worldwide that are undertaking debt reforms and asset sales to boost their balance sheets as they face depressed freight rates amid overcapacity. Hyundai Merchant will sell 280 million new shares to shareholders, creditors, bondholders and ship owners as part of a debt-for-equity swap to cut its debt ratio from 5,309% at the end of March.
“Now that all conditions have been met, creditors plan to carry out the debt-restructuring plan,” Korea Development Bank, Hyundai Merchant’s main creditor and biggest shareholder, said in a separate statement Thursday. “Through the restructuring, the company will be able to cut its debt-to-equity ratio to below 400% and improve its cash flow.”
Shares of Hyundai Merchant fell 1.9% to close at 12,850 won in Seoul trading before the company issued the statement. The stock has dropped 56% this year, the third-worst performer on the benchmark Kospi index.
Joining the alliance will help Hyundai Merchant reduce costs and improve its competitiveness, the shipping company has said. It will also enable Maersk and Mediterranean Shipping to bolster their services on trans-Pacific routes.
Hyundai Merchant plans to complete the new share sale later this month after Hyundai Group’s shareholding is cut through capital reduction.
