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Aiming to breed Hyundai Merchant Marine (HMM) as a globally competitive Korean flag sea carrier in lieu of bankrupt Hanjin Shipping, the government will funnel fresh funds of 750 billion won ($656.6 million) into the shipper as early as this month.
The funding will aid HMM to purchase additional terminals at home and abroad and enlarge its fleet of containerships, according to a senior member of the decision-making Financial Services Commission (FSC).
Korea Shipping, a new shipping bank established by state lenders aimed to promote seagoing liners, will provide 750 billion won to HMM through purchase of 150 billion won in its new share issues and 600 billion in convertible bonds, Sohn Byung-doo, a FSC board member told reporters on Tuesday. The funding would take place later this month or by early next month.
Separately, the shipping bank will buy vessels at market price and lease them back to HMM for liquidity relief to use the difference for equity investment.
“The initial paid-in capital of 1 trillion won of Korea Shipping could be raised to 1.5 trillion won through leveraging,” said Sohn.
He also added that Hyundai Merchant Marine would have to withdraw from the world’s largest 2M Alliance that will be launched in April after the three-year membership period because the Korean shipper cannot expand under current membership terms.
Shares of HMM closed Wednesday at 8,060 won, up 0.37 percent or 30 won from the previous session.
By Kim Jung-hwan
Copyrights Pulse by Maeil Business News Korea. All Rights Reserved.
Source: Pulse by Maeil Business News Korea (Feb. 15, 2017)