[Yonhap News Photo]
South Korea's cash-strapped Hyundai Merchant Marine will hold crucial negotiations with five foreign ship owners this week in Seoul on lowering rates on charter ships as the deadline set by creditors draws near, bank officials said Monday.
Hyundai Merchant is under pressure to complete negotiations on lowering rates on leased vessels by Friday. The company paid 976 billion won ($838 million) in charter fees last year. Financial officials have mentioned an inevitable choice of putting Hyundai Merchant under a court receivership if negotiations with ship owners fall apart.
Talks with chartered ship owners will be held on Wednesday at the office of Hyundai Merchant's main creditor, Korea Development Bank (KDB), a KDB official said, adding financial and bank officials would also attend the meeting to help the shipping unit reach a quick accord.
"We are not optimistic about the results of (negotiations) but we will do our best for a turnaround in Hyundai Merchant's operation," the KDB official said.
Hyundai Merchant aims to cut leased fees by 28.4 percent on average that would help the company save about 720 billion won (613 million US dollars) for three years and six months.
Hyundai Merchant, one of South Korea's two largest container carriers, has been left out of a new global shipping alliance formed by six Asian and European container-shipping operators last week to challenge the dominance of global giants such as Maersk Line and Mediterranean Shipping Co.
Initially, Hyundai Merchant was a candidate to be included in the alliance, but it dropped out apparently due to uncertainty caused by delayed negotiations with ship owners.
Hanjin Shipping, one of the world's top ten container carriers in terms of capacity, was included in the alliance, although it was also put under a creditor-led restructuring plan this month. Creditors rolled over its maturing debt for three months.
A prolonged slump in global trade and overcapacity have depressed transportation rates, causing shipping lines to stem losses through job cuts and consolidation. Being part of a vessel-sharing alliance has become imperative for container carriers in the industry. Alliance partners can reduce costs by sharing ships, networks and port calls.
Aju News Lim Chang-won = cwlim34@ajunews.com
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