The South Korean government has increased its share in container line HMM even though it has expressed a desire to offload its stake in the carrier, reports Seatrade Maritime.
Hybrid bonds
Alphaliner reported that the government effectively swapped debt for equity in the line for what are hybrid bonds that could pay out, but are worth about three times the value when converted to shares in the company.
The bonds were exchanged for 132 million shares at a price of KRW 5,000 per share.
A further complication to HMM’s privatisation plans is not only will the increase in the share of the line mean that the sale price will increase, but the government holds further bonds which will need to be converted by next April, and again the probability will be that the two banks will convert these into shares, raising Seoul’s stake to 74%.
Red Sea diversions
Moreover, with the Red Sea diversions absorbing much of the newbuilding capacity, that was expected to create an over-supply of cargo space, rates and therefore returns have been riding high.
HMM posted a net profit of KRW 661 billion ($478 million) for Q2, its best quarterly result since Q4 2022, reported Alphaliner.
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Source: Seatrade Maritime
