South Korea strengthens its hold on HMM, raising questions about the company’s path to privatization
3 weeks ago
South Korea strengthens its hold on HMM, raising questions about the company’s path to privatization
Korea Development Bank (KDB) and Korea Ocean Business Corp (KOBC) increased their stake in South Korea's leading container carrier, HMM, to 67.05%, after converting KRW660bn ($478.25m) in bonds to equity. This move raised their combined shareholding from 418.79 million to nearly 551 million shares.
The increased state ownership in HMM has added ambiguity to the government's intentions regarding privatization. HMM has been under state control since 2016, following a debt-for-equity swap led by KDB to rescue the carrier from financial collapse.
Last week, Korea’s Minister for Oceans and Fisheries, Kang Do-hyung, indicated that the government remains open to selling its shares in HMM, with Harim Group chairman Kim Hong-kuk announcing interest in another bid should HMM be put back up for sale. Harim, in partnership with JKL Partners, was the preferred bidder during the first privatization attempt last December, though the sale fell through in February over unresolved terms and concerns about Harim’s capacity to finance HMM’s scale.
Former Oceans Minister Kim Young-choon recently warned that further delays in privatization could impact the carrier's market value, especially if economic downturns hinder demand. He explained that HMM was restructured under government leadership following Hanjin Shipping's collapse in 2017 and that privatization was always the intended end goal once HMM achieved stability.
If KDB and KOBC were to convert all remaining bonds, the state’s stake could exceed 70%, complicating future privatization efforts even further.
An HMM spokesperson commented, "Only major shareholders KDB and KOBC can decide on bond-to-share conversions; HMM does not have authority over these actions."
Source: The Loadstar