Hyundai Merchant to raise 114 bln won by selling new shares

Hyundai Merchant Marine (HMM) Co., South Korea’s No. 2 shipping line, said Monday that it plans to secure 114 billion won (US$112 million) by issuing new shares to a new investor in a bid to improve its faltering financial health.

The cash-strapped shipping company said it will float 6.81 million convertible preferred shares worth 57 billion won on Monday and sell them to its shareholder Market Vantage Ltd., a Hong Kong-based investment firm.

Market Vantage, linked to a multinational port facilities operator, already controls a 1.73 percent stake, or 2.92 million shares, in Hyundai Merchant Marine.

Convertible preferred shares include an option for the holder to convert the shares into a fixed number of common shares after a predetermined date.

Hyundai Merchant Marine said its new shares sold to the investment firm can be converted into ordinary shares one year after their issuance.

The shipping company said that it will sell 57 billion won worth of new stocks to the investment firm in the second half of the year.

“The arrival of fresh funds is noteworthy because it does not involve asset sales and the money will come in the form of investment that can reduce debt levels and improve overall financial health,” the company said in a press release, adding that such developments can lay the foundation for it to turn a profit this year.

In the first quarter, the company’s debt ratio, or the ratio of total debt to total assets, stood at 1,600 percent.

Hyundai Merchant Marine said its debt ratio has been greatly reduced thanks to the self-help measures being implemented in a timely and smooth manner.

HMM, a unit of Hyundai Group, has been hard hit by sluggish maritime cargo demand and stiff competition.

Hyundai Group said in its self-rescue plan released late last year that it will come up with 3.3 trillion won in fresh cash to deal with debts confronting its affiliate including its shipping unit.

At present, the conglomerate has secured more than 2 trillion won in funds that includes cash from the selling off of HMM’s LNG operations, along with liquidation of containers and certain port facilities.

The group also aims to sell off Hyundai Securities Co. and two other financial affiliates to generate more funds.
Source: Yonhap