Hyundai Merchant stock soars amid talk of Hanjin Shipping asset purchases

The second-biggest shipping company in South Korea saw its shares surge as troubled domestic rival continues to takes on water following collapse.
The Hanjin Rome lies stranded in Singapore waters on September 22, 2016. The company may be forced to sell assets as it battles to stay afloat. Edgar Su / Reuters
The Hanjin Rome lies stranded in Singapore waters on September 22, 2016. The company may be forced to sell assets as it battles to stay afloat. Edgar Su / Reuters

Hyundai Merchant Marine, South Korea’s second-largest container line, surged in Seoul trading after the company was said to be looking at some assets of troubled rival Hanjin Shipping for a possible acquisition.

The stock jumped 6 per cent to close at 8,700 won, helping to trim the decline this year to 70 per cent. Hanjin shares fell 12 per cent to 955 won.

Financial institutions that provided money to Hanjin specifically to buy carriers have approached Hyundai Merchant for sale of its vessels, mostly container ships, people with direct knowledge of the matter said, asking not to be identified. Korea Development Bank – the largest shareholder of Hyundai Merchant and the biggest lender to Hanjin – and the Seoul Central District Court have been pushing to find a solution to the troubles at Hanjin, whose filing for bankruptcy protection last month has roiled the global supply-chain industry.

“The government is trying to make Hyundai Merchant more competitive by buying some of Hanjin’s assets,” said Park Moo-hyun, an analyst at Hana Financial Investment in Seoul. “If a purchase happens, we will have to wait and see how it can really help Hyundai Merchant.”

Hyundai Merchant is not aware of any specific reason for the stock’s surge Monday, a spokesman said. Separately, Hyundai Merchant intends to announce its long-term business plan in November, which could include reorganization of its structure and staff, the company said on Monday.

Hyundai Merchant is in the midst of a creditor-led debt-restructuring programme. Unlike Hanjin, it has managed to obtain financial help after meeting all requirements for funds, including adjusting charter rates. The state-run Korea Development Bank is now the biggest shareholder of Hyundai Merchant after swapping debt for equity. KDB owns about 12 per cent of the company, according to data compiled by Bloomberg.

Creditors and owners are stepping up efforts to help ease cargo disruptions resulting from boxes stuck on Hanjin’s stranded vessels. Last week, KDB said it will offer a credit line of 50 billion won (Dh165.2m) to Hanjin if funds previously pledged by the owners are insufficient to ease the situation.

“Hanjin Shipping selling assets will put a dent in its competitiveness,” said Cho Byung-hee, an analyst at Kiwoom Securities in Seoul. “This means the scope of its business is going to shrink from now.”

The government said September 23 that it will come up with a plan next month to help improve the competitiveness of the nation’s shipping industry, said the vice minister of Oceans and Fisheries Yoon Hag-bae said. The plan will focus on securing “affordable” vessels and the government may consider ordering new ships to enable Hyundai Merchant to handle exports, he said.

Follow The National’s Business section on Twitter

Published: September 26, 2016 04:00 AM


Editor's Picks
Sign up to:

* Please select one

Most Read