1.9 C
Sunday, February 5, 2023
Home Most Visited SM Line takes minority stake in HMM; minister says still early to...

SM Line takes minority stake in HMM; minister says still early to assert market recovery

South Korean liner operator SM Line Corporation has become a minority shareholder in its larger compatriot rival HMM, with a 0.49% stake.

SM Line, which withdrew its initial public offering in November, said on 29 December that it had paid US$14 million for 613,438 of HMM’s shares.

The company sought to downplay any speculation that it plans to acquire HMM, of which the government is planning to gradually release its grip, asserting that the stake purchase is purely for investment.

The state’s shares in HMM are held through policy lenders Korea Development Bank and Korea Ocean Business Corporation which have total holdings of around 44%, could exceed 70% as they still hold convertible bonds, which can be changed into HMM shares.

Coincidentally, at a press conference the same day to announce the success of the government's Five-Year Plan to revive the maritime sector, the Minister of Oceans and Fisheries, Moon Sung-hyeok, opined that it is not yet time for the government to dispose of its stake in HMM.

“I hope that the day will come sooner when we can grow HMM and make it an independent company that feels like having a book and poetry collection," said Moon.

In 2016, KDB and HMM’s other creditor banks agreed to swap debt for equity after the company put up a self-rescue plan involving lowering rates for long-term chartered vessels.

Moon’s opinion contrasted with that of his deputy, Eom Ki-doo, and KDB chairman Lee Dong-gull.

Like many of its peers in container shipping, HMM has been making record profits, with a cumulative net profit of US$2.26 billion from January to September this year, causing market observers to opine that it is time for the state to release its protection.

However, Moon believes that liner operators are doing well due to Covid-19-related supply chain disruptions and it is still early to assert that HMM has truly rebounded.

The minister noted, “If HMM pays off all of its debts to the government and its stable net income grows, the market will have a different valuation. It’s our role to make the goose stronger so that it can continue to produce golden eggs. When that happens, HMM has to pay off its debts to the government."

Martina Li
Asia Correspondent

Latest Posts

Virginia Inland Port gets all operational power needs from clean-energy resources

Virginia Inland Port (VIP), an intermodal container transfer facility in Front Royal, Virginia (Warren County) owned by the Virginia Port Authority, is fulfilling all...

Kalmar, Holmen Iggesund extend cooperation agreement for three years

A three-year collaboration deal that was first signed in 2019 between Holmen Iggesund, a member of the Holmen Group, and Kalmar has been extended. The...

CMA CGM becomes official partner of Paris 2024 Olympic and Paralympic Games

The CMA CGM Group will make its expertise available to Paris 2024, by handling the transport and logistics for all the goods, equipment, and...

MSC announces temporary suspension of Beira – Zimbabwe rail service

MSC announced that the through Bill of Landing (TBL) rail service to/from Bulawayo, Harare and Mutare to/from Beira will be temporarily suspended with immediate...

Drydocks World, Aker Solutions join forces to upgrade production at UK’s Rosebank oil and gas field

A joint venture was established by DP World-owned Drydocks World and Aker Solutions to refurbish a floating production storage and offloading (FPSO) vessel for...