South Korean shipping line Hyundai Merchant Marine (HMM) said it has signed a deal for a strategic cooperation with 2M Alliance, paving the way for the company to better compete with rivals.
HMM recently signed the agreement called “2M+H Strategic Cooperation” with 2M Alliance, the world’s largest container shipping consortium, in San Francisco.
Soren Skou, CEO of Maersk Group, and C.K. Yoo, CEO of HMM, inked the deal officially launching the cooperative arrangement on the East-West routes between HMM and the members of the alliance, Maersk Line and Mediterranean Shipping Company (MSC).
In December last year, HMM agreed with Maersk Line and MSC on a new cooperation involving slot exchanges and slot purchases among the three.
The initial term of the strategic cooperation is three years with an option to extend and cover key East-West trades.
Since May last year, HMM 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 carrier’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.
The membership in a global alliance is crucial for the Korean carrier to take on bigger rivals amid a glut in capacity, which has led to a drop in freight rates.
Meanwhile, Hyundai Merchant signed a memorandum of understanding with a state-run shipbuilding financing firm last week to sell part of its fleet to receive fresh funding, according to a report by Yonhap News.
Under the deal, Hyundai Merchant will sell 10 container ships at the combined market value of KRW150 billion (US$131 million) to Korea Shipping Co. versus their book value of KRW850 billion. The shortfall will be financed with sales of bonds and stocks to the financing firm.
The measure will help the shipping firm improve its financial status, HMM said.
Korea Shipping will buy some KRW100 billion worth of stocks to be sold by Hyundai Merchant and KRW600 billion worth of bonds convertible into the shipper’s stocks, according to HMM.
Photo: Alf van Beem
