A consortium led by food conglomerate Harim Group was picked Monday as the preferred bidder for South Korea’s top container shipper HMM Co. (Image courtesy of Yonhap)
SEOUL, Dec. 18 (Korea Bizwire) — A consortium led by food conglomerate Harim Group was picked Monday as the preferred bidder for South Korea’s top container shipper HMM Co., creditors said, heralding the start of its privatization.
Last month, two state agencies — the state-run Korea Development Bank (KDB) and the Korean Ocean Business Corp. — conducted a final bidding for their controlling stake in HMM, drawing the Harim-JKL Partners consortium and Dongwon Group.
The Harim-led consortium reportedly offered to pay some 6.4 trillion won (US$4.92 billion) for the 398.8 million shares up for sale, which KDB acquired in a debt-for-equity swap seven years earlier.
The bid price narrowly beat that of Dongwon, and the Harim-JKL Partners consortium received better points in other factors, including how to finance the takeover, according to sources.
Main creditor KDB and the corporation are slated to sign a stock purchase agreement with the Harim-led consortium after negotiations on takeover details before finalizing the deal during the first half of next year.
In 2013, KDB injected 6.8 trillion won in public funds into troubled Hyundai Merchant Marine, HMM’s predecessor, which went bankrupt and was placed under KDB control three years later.
In a bid to keep Hyundai Merchant Marine afloat, the government set up the Korean Ocean Business Corp., which helped the shipper place orders for 20 very large vessels to boost its competitiveness.
The company was renamed HMM and it posted its first profit in nine years in 2020. HMM recorded a record operating profit of 9.9 trillion won in 2022 on sales of 18.6 trillion won, prompting the creditors to start the process of its sale.
Harim Group owns Harim Co., the country’s largest poultry-processing company, and JKL Partners is a major private equity fund.
The two state agencies had planned to announce the prime bidder by early December, but it has been delayed due to the Harim consortium’s several conditions for a takeover.
One of the conditions is its demand that the sellers delay their conversion of perpetual bonds into equity for three years after the purchase, according to watchers.
The Harim-JKL Partners consortium reportedly withdrew their demands ahead of the announcement of the prime bidder.
Harim and JKL Partners have announced plans to raise funds for the acquisition by selling stock and bond holdings, issuing perpetual bonds and selling vessels.
A successful takeover would raise Harim Group’s assets to 42.8 trillion won, making it South Korea’s 13th-biggest conglomerates, up 14 notches from its current rank.
Currently, Harim Group owns Pan Ocean Co., South Korea’s leading bulk carrier with a fleet of 301 vessels and an annual cargo capacity of 100 million tons.
Market analysts voiced concerns that Harim would face such hurdles as waning demand stemming from a global economic slowdown and rising interest rates, and a supply glut, or a rise in the number of vessels.
The Shanghai Containerized Freight Index, a short-term barometer of global freight rates, stood in the 866-1,043 band in the third quarter of this year, nearly one-fourth of that a year earlier.
Other negative factors include such geopolitical risks as the Hamas-Israel war and Ukraine’s conflict with Russia, they said.
(Yonhap)
