BREAKING NEWS: Hyundai Merchant Marine Signs On To 2M Alliance
Following agreements with bond-holders to adjust debt and shipowners to adjust charter rates, Hyundai Merchant Marine (HMM) announced today that the company signed a binding memorandum of understanding with the 2M Vessel Sharing Agreement (2M VSA) for providing joint service to begin from April 2017.
Maersk Line and Mediterranean Shipping Company are the two current members of the 2M alliance.
The MOU signed between HMM and the 2M carriers is a binding agreement with regards to HMM’s entry to the 2M VSA.
By accessing 2M VSA network, HMM will be able to strengthen its service offering and achieve improved cost competitiveness. The 2M carriers will benefit from a reinforced service competency in Asia and improved network cover in the transpacific area, according to a statement from HMM.
HMM was earlier courted by member of the new THE Alliance.
With today´s announcement, HMM has successfully completed all conditions set out in the voluntary agreement with creditors entered into last March and, with that, the planned debt-for-equity swap with creditors will be executed as planned.
Once that debt-for-equity swap is completed, HMM’s financial structure will be significantly improved, the company said.
“Based on the company’s sound financial structure, HMM will put its utmost efforts into improving our service offering to clients and to continue increasing operational competency in the second half of this year to continue improving profitability of our company,” said an HMM spokesperson.
Key to the restructuring of HMM’s debt was an agreement reached last month with ship owners to cut leasing rates by 21 percent over the coming three and a half years. The reduction rate fell short of the company’s goal of 28.4 percent, but HMM creditors accepted the agreement, helping the carrier avert receivership proceedings in court. Hyundai says the charter rate reductions will save it $450 million.
Korea Development Bank and other creditors threatened that they would seek receivership for Hyundai Merchant Marine if the carrier failed to meet three conditions: a charter rate cut, debt rescheduling approved by bondholders, and inclusion into a global shipping alliance.
Bondholders have approved a $690 million debt rescheduling, under which more than half the debt will be exchanged for HMM shares and the remaining debt will be paid back in two years.
The creditors also agreed to swap $580 million in debt for stock, all in an effort to keep the carrier in business. Hyundai Merchant had debts of about $445 billion as of the end of March.
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