Final Sale of Car Carrier of Hyundai Merchant Marine

Overseas sale of car carrier of Hyundai Merchant Marine which had rough going on the suspicion of remittance to North Korea, will finally reach an agreement through acquiring an approval of EU on December 2. The acceptance financing (Syndicate loan) of banks amounting to USD 950 will be executed within the next week and then will be paid to Hyundai Merchant Marine.

Hyundai Merchant Marine will use approx. USD 1.4 trillion out of proceeds from sale for the repayment of borrowings and immediate acquisition of debentures on December 2.

A high-ranking official of Financial Supervisory Commission (FSC) said on November 29, “The final step of the overseas sale of car carrier of Hyundai Merchant Marine, the approval of EU Executive Committee will be made on December 12.. So, the sale of car carrier of Hyundai Merchant Marine was concluded.”

He said, “Because the syndicate loan was made on the assumption of EU approval, the acceptance financing of USD 950 will be paid to Hyundai Merchant Marine in accordance with a determination of EU. Hyundai Merchant Marine will repay the borrowings with proceeds from sale on December 6.”

Hyundai Merchant Marine received the proceeds from sale amounting to USD 1.5 billion and then came to the agreement on the sale of car carrier to WWL, marine transportation business of Sweden early in August. However, as the approval of EU has been delayed and the remittance to North Korea has been in suspicion, its sale has been in difficulties. The official of FSC added, “EU investigated whether there is any factor of unfair transaction such as an exclusive possession.”

According to FSC, Hyundai Merchant Marine and banks, the acceptance financing of banks amounting to USD 950 million will be paid to Hyundai Merchant Marine as ‘RoRo Korea’, a joint venture with 80% investment of WWL and 20% of Hyundai Kia Cars provides money to banks.

Out of them, for USD 650 million, 11 financial companies participated in the syndication recommended by Korea Development Bank (KDB) and Korea Exchange Bank (KEB). Citi Bank acquired the remaining USD 3 billion.

The concerned official of creditors of Hyundai Merchant Marine said, “As of the end of June, total liabilities of Hyundai Merchant Marine are KRW 4900 billion. Among then, the short-term liabilities amount to KRW 2200. Accordingly, the debt ratio of Hyundai Merchant Marine will go down to 400% less than 500% of the average of the world marine transportation industry from 1390% of the end of last year.”

Dong-Won Kim daviskim@donga.com