Hyundai Merchant, shipowners fail to reach deal over charter rate cut

Hyundai Merchant Marine employees walk past a company signboard at its parent Hyundai Group’s headquarters in downtown Seoul. (Yonhap file photo)

SEOUL (Yonhap) — Financially ailing Hyundai Merchant Marine Co. and the owners of ships that it leases on Wednesday failed to reach an agreement over a cut in charter rates as the shipper faces risks of being under court receivership, company officials said.

Hyundai Merchant and high-ranking officials from five major shipowners held their talks over the charter rate cut in downtown Seoul earlier in the day, which is crucial to the South Korean shipper’s fate.

The country’s No. 2 shipper has been under severe financial strains in the face of falling freight rates amid a protracted slump in the world’s economy.

Since February, Hyundai Merchant has been in talks with shipowners to cut the rates.

Last month, the creditors gave the nod to the financially troubled Hyundai Merchant’s self-rescue plans, including asset sales, on the condition that it should complete renegotiations with the owners of chartered ships to lower their charter rates by 28 percent on average by the middle of May to stay afloat and implement far stronger self-rehabilitation measures.

The creditors have warned that they will put Hyundai Merchant under court receivership if there are no “meaningful” results from the negotiations, according to industry sources.

Hyundai Merchant reportedly made a proposal to the shipowners that half of the lowered charter rates will be compensated through a swap with the shipper’s stocks.