SEOUL, March 24 (Korea Bizwire) – Embattled shipper Hyundai Merchant Marine Co. is faced with a series of hurdles toward its normalization as some of its creditors oppose extending part of its maturing debts and its efforts to cut rates paid to the owners of chartered ships made little progress, industry sources said Thursday.
According to the sources, Hyundai Merchant, the country’s No. 2 shipper, has to pay off or roll over 120 billion won (US$103 million) worth of debt due early next month and an additional 240 billion won in July.
But some of its creditors rejected a proposal by its main creditor, the state-run Korea Development Bank, to roll over the maturing debts.
Also, the creditors are discussing whether to approve a proposed self-rescue plan by the shipping line by the end of the month in return for the company cutting the fleet rates.
Hyundai Merchant has been in talks with the owners of chartered ships to cut the rates since February this year, but its efforts have not shown progress, according to the sources.
Creditors have been pressing Hyundai Merchant to sharply cut chartered ships’ lease rates. Otherwise, they will not map out a rescue plan for the shipper.
If Hyundai Merchant’s self-rescue plan is approved, the shipper’s maturing debts will be rolled over and part of them will be rescheduled.
Earlier this month, Hyundai Merchant, an embattled shipping unit of the Hyundai Group, decided to push for capital reduction aimed at improving its financial health.
The Hyundai Group has been working to salvage Hyundai Merchant, one of its key units, which has been in the red for years due to a decline in freight rates and global trade.
Recently, the group announced a set of self-rescue measures to improve the financial health of the company, including an asset sale.
Last year, Hyundai Merchant posted 253.5 billion won in operating losses, with its capital significantly eroded.’