Hyundai Merchant Said to Be Looking at Buying Hanjin Assets
Hyundai Merchant Marine Co., South Korea’s second-largest container line, surged in Seoul trading after the company was said to be looking at some assets of troubled rival Hanjin Shipping Co. for a possible acquisition.
Financial institutions that provided money to Hanjin specifically to buy carriers have approached Hyundai Merchant for sale of its vessels, mostly containerships, people with direct knowledge of the matter said, asking not to be identified, as the talks are private.
Korea Development Bank — the largest shareholder of Hyundai Merchant and the biggest lender to Hanjin — and the Seoul Central District Court have been pushing to find a solution to the troubles at Hanjin, whose filing for bankruptcy protection last month has roiled the global supply chain.
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“The government is trying to make Hyundai Merchant more competitive by buying some of Hanjin’s assets,” said Park Moo-hyun, an analyst at Hana Financial Investment Co. in Seoul. “If a purchase happens, we will have to wait and see how it can really help Hyundai Merchant.”
Hyundai Merchant isn’t aware of any specific reason for the stock’s surge Sept. 26, a spokesman said.
Separately, Hyundai Merchant intends to announce its long-term business plan in November, which could include reorganization of its structure and staff, another company spokesman said Sept. 26. A.T. Kearney Inc., International Business Machines Corp. and FM Associates are consulting the container line on the plan, he said.
Hyundai Merchant is in the midst of a creditor-led debt-restructuring program. Unlike Hanjin, it has managed to obtain financial help after meeting all requirements for funds, including adjusting charter rates. State-run Korea Development Bank is now the biggest shareholder of Hyundai Merchant after swapping debt for equity. KDB owns about 12% of the company, according to data compiled by Bloomberg News.
Creditors and owners are stepping up efforts to help ease cargo disruptions resulting from boxes stuck on Hanjin’s stranded vessels. Last week, KDB said it will offer a credit line of 50 billion won ($45 million) to Hanjin if funds previously pledged by the owners are insufficient to ease the situation.
“Hanjin Shipping selling assets will put a dent in its competitiveness," said Cho Byung-hee, an analyst at Kiwoom Securities Co. in Seoul. "This means the scope of its business is going to shrink from now.”
The government said Sept. 23 that it will come up with a plan next month to help improve the competitiveness of the nation’s shipping industry, Vice Minister of Oceans and Fisheries Yoon Hag-bae said. The plan will focus on securing “affordable” vessels and the government may consider ordering new ships to enable Hyundai Merchant to handle exports, he said.
