Newly appointed Korea Development Bank (KDB) chairman Kang Seok-hoon said in a press briefing that the bank must divest its holdings in the country’s flagship liner operator, HMM, as soon as possible.
Kang, who was appointed in June, was speaking at a press conference to mark his first 100 days of office.
He opined that HMM’s finances and operations have normalised and no longer need state support. KDB became its main shareholder after a debt-for-equity swap in 2016, after the company encountered a debt crisis.
Kang’s position echoes that of the recently appointed Minister for Oceans and Fisheries, Cho Seung-hwan, who recommended in August that the government’s shares, held by KDB, Korea Ocean Business Corporation (KOBC), Korea Credit Guarantee Fund (KODIT) and National Pension Service, be sold in phases.
Earlier this year, KDB agreed with KOBC to co-manage HMM. In June 2021, KDB converted KRW300 billion (US$265.49 million) of convertible bonds into six million HMM shares, more than doubling its stake from the previous 11.94% to 24.96%.
In all, KDB, KOBC, KODIT and the National Pension Service hold a combined 52%, but convertible bonds that mature in 2023 could raise their stake to 74%, and the high price would discourage any buyers from coming forward.
Kang said, “In the case of HMM, we must look at it from the larger framework of the entire shipping industry in our country. Consultation with the government is, therefore, necessary.”
Kang added that KDB should also quickly sell off its stake in Daewoo Shipbuilding & Marine Engineering (DSME), whose sub-contracted workers ended a 51-day strike in July. KDB has been a DSME shareholder for more than 20 years and its stake stands at 55%.
He said, “In order for DSME to be a great company, research and development or investment has to be made, but it’s difficult with KDB in charge. We have to meet with a new management entity that could run the shipbuilder more efficiently, and if there’re potential buyers, we will review their conditions. That said, it’s not possible for us to sell DSME’s naval vessel construction business to foreign buyers.”
Martina Li
Asia Correspondent
