HMM Hopes to Join THE Alliance
Hyundai Merchant Marine (HMM) was conspicuously left out of a newly formed ocean carrier consortium dubbed THE Alliance.
The formation of THE Alliance was announced recently by Hanjin Shipping, Mitsui OSK Lines, Nippon Yusen Kaisha, ‘K’ Line, and Hapag-Lloyd. The combination will operate in the east-west trades including Asia-Europe/Mediterranean, Asia-North America West Coast, Asia-North America East Coast, transatlantic, and Asia-Middle East/Persian Gulf/Red Sea.
HMM, which has been plagued by liquidity problems, said that it hopes to join the THE Alliance by June, by which time it hopes to have made arrangements with its creditors.
HMM sustained a $553.4-million loss for 2015, reversing a 2014 profit of $18.6 million. An external audit found HMM has long-term liabilities of $2.1 billion.
The G6 Alliance, of which HMM, South Korea’s second largest shipping line, is a member, will continue operating until March 2017, noted the carriers, in a statement. “This suggests that there won’t be any changes regarding HMM’s business and operation caused by the formation of THE Alliance for the time being,” the company contended.
HMM believes that the structure of the THE Alliance is still tentative and its membership has yet to be finalized.
“HMM’s entrance into THE Alliance is only being postponed as there have been several media reports since the beginning of this year about the possibility that HMM might be under court receivership,” the company said. “The current members of THE Alliance are going to determine HMM’s participation once HMM’s business is normalized.”
HMM’s creditors have agreed to a forbearance on the carriers debt repayments until June 29, at which point HMM’s debts may be restructured based on the recommendations of an ongoing audit.
Key to HMM’s restructuring is to close a deal with its tonnage providers, which own 85 of the 124 ships the company operates. HMM said it will attempt a debt-for-equity swap with creditors “to promptly normalize its business.”
HMM believes that membership in THE Alliance “is only a matter of time.”
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