Hyundai Denies Hanjin Merger Talks


Hyundai Merchant Marine (HMM) has refuted talks that the Korean government had asked it to merge with Hanjin Shipping, after completing a US$216 million permanent convertible bond through a newly created entity called Hyundai Bulk Line, according to the Journal of Commerce.

Hanjin and HMM have been actively taking steps to boost their cash flow since 2013 after suffering two consecutive annual losses.

A HMM spokesperson said: “The sale of the Hyundai Securities stake was cancelled, so divesting the bulk businesses and the terminals is a new option to secure liquidity.”

When asked about rumours that the company would sell its stakes in Hyundai Elevator and tour operator Hyundai Asan, the spokesman said: “Nothing is confirmed yet. We are considering several options. We are trying to secure more liquidity through various ways such as issuing perpetual bonds.”

HMM said that it does not expect to have any more cash flow issues due to active steps taken since 2013 to boost liquidity and cash flow.

Jay Ryu, Analyst at KDB Daewoo Securities, said: “If Hanjin Shipping incurs an operating loss, cash flow will likely turn negative, meaning the company will need to borrow more money. With oil prices already so cheap, the company’s only recourse in such an event would be to wait for a pickup in rates, which seems unlikely for now.”

It was previously reported that the government had requested for a merger between the two shipping lines. However, Hanjin Shipping believed that this operation would be hard to materialise.

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