Hyundai Merchant Marine Co., 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 Co. for a possible acquisition.
The stock jumped six percent to close at 8,700 won, the highest level since Sept. 8, helping to trim the decline this year to 70 percent. Hanjin shares fell 12 percent 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, as the talks are private. 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 Co. in Seoul. “If a purchase happens, we will have to wait and see how it can really help Hyundai Merchant.”
Hyundai Merchant isn’t 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, another company spokesman said Monday. A.T. Kearney Inc., International Business Machines Corp. and FM Associates are consulting the container line on the plan, he said.
Hyundai Merchant is in the midst of a creditor-led debt-restructuring program. Unlike Hanjin, it has managed to obtain financial help after meeting all requirements for funds, including adjusting charter rates. State-run Korea Development Bank is now the biggest shareholder of Hyundai Merchant after swapping debt for equity. KDB owns about 12 percent 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 ($45 million) 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 Co. in Seoul. “This means the scope of its business is going to shrink from now.”
The government said Sept. 23 that it will come up with a plan next month to help improve the competitiveness of the nation’s shipping industry, 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.
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