SEOUL, Dec. 12 (Korea Bizwire) – Stocks of Hyundai Merchant Marine Co. traded higher on the Seoul bourse Monday, rebounding from the previous session’s 6 percent drop, after it agreed to a “limited partnership” with the world’s largest shipping alliance.
Hyundai Merchant changed hands at 7,060 won as of 10:30 a.m., up 2.17 percent from the previous session’s close.
On Sunday, Hyundai Merchant, South Korea’s No. 1 shipping line, said it has agreed to share vessel space with 2M, whose members include A.P. Moeller-Maersk A/S and Mediterranean Shipping Co., and Hyundai Merchant will also purchase space on the two companies’ ships, a strategic relationship that falls short of a full membership.
Hyundai Merchant said the strategic partnership with the 2M is subject to regulatory approval and will begin services on April 1. Hyundai Merchant added it may become an official member of the 2M alliance after three years, should its business results improve.
Since May, Hyundai Merchant has been seeking to become a member of 2M, one of the prerequisites set by its creditors to avert court receivership.
In April, its creditors, led by the state-run Korea Development Bank, approved the shipper’s restructuring plan in return for the company meeting three key conditions — a debt recast, a charter rate cut and inclusion in a global shipping alliance.
In July, Hyundai Merchant signed a memorandum of understanding with the world’s largest shipping alliance. The 2M Alliance currently handles 28 percent of the global sea container cargo.
The membership in a global alliance is crucial for the shipper to take on bigger rivals amid a glut in capacity, which has led to a drop in freight rates.
Hyundai Merchant Marine, currently under a creditor-led restructuring scheme, is seeking to take over key assets from Hanjin Shipping Co., which has been under receivership since September.
A consortium led by Hyundai Merchant is highly likely to be chosen as the preferred bidder for Hanjin Shipping Co.’s U.S. port terminal as a mid-sized local shipping firm has withdrawn its bid to buy a stake in one of the troubled shipper’s lucrative assets.
Hyundai Merchant said it will expand its presence in the U.S.-Asia route while putting more efforts to focus on its container shipping business.
Meanwhile, its creditors plan to provide 300 billion won (US$256 million) in fresh funds to the shipping line for its asset purchases.