HMM, Korea’s leading shipping company that is under the control of the state-run Korea Development Bank (KDB), decided to compete with foreign companies to regain Hyundai LNG Shipping from IMM Private Equity, according to industry officials, Friday.
Hyundai LNG Shipping was formerly a business division of HMM, but it was sold to IMM during HMM’s liquidity crisis in 2014.
Although HMM remained cautious about its participation in the main bid by Friday’s deadline, the shipping firm’s board of directors is said to have agreed on Thursday to offer around 300 billion won ($230 million) as the acquisition price.
The latest decision is mainly attributed to growing calls from domestic shipping industry officials to prevent the private equity firm’s attempt to sell the Korean shipping firm to a potential buyer from the U.S., the U.K. or Denmark.
On Thursday afternoon, the Federation of Korean Seafarers’ Unions held a meeting in Busan to declare its opposition to the potential sale of Hyundai LNG Shipping to a foreign firm.
“Amid the growing concerns about Korea facing risks to its import of liquefied natural gas (LNG) and Korean seafarers losing their jobs, the sale of Hyundai LNG Shipping to a foreign firm should be prohibited to prevent the recurrence of a case similar to Hanjin Shipping’s bankruptcy,” the federation said.
Along with the Federation of Korea Maritime Industries, the unionized seafarers also issued a statement on May 8 to urge the government to ban IMM from selling the LNG shipping firm to a foreign company, citing a potential threat to the nation’s energy security.
They raised concerns at that time over the possibility of Korea’s know-how of shipping LNG being leaked, as well as the outflow of a massive amount of national wealth, given that Hyundai LNG Shipping has shipped for the state-run Korea Gas Corp. (KOGAS).
In particular, ship owners claimed this could affect the ongoing sales procedures of SK Shipping and Polaris Shipping, both of which ship strategic commodities.
The Ministry of Oceans and Fisheries, which supervises the Korea Ocean Business Corp., the second-largest shareholder of HMM, also hinted in April that it may put the brakes on IMM selling Hyundai LNG Shipping to a foreign firm.
“If necessary, we will review possible ripple effects, along with KOGAS and other relevant institutions,” the ministry said.
Amid the pressure, the seller postponed the main bid, saying it is open to selling Hyundai LNG Shipping to a Korean company if the buyer offers a reasonable price.
Given that Hyundai LNG Shipping was evaluated at up to 700 billion won earlier this year, it is still uncertain whether HMM will succeed in its latest bid. The potential buyer reportedly failed in its previous attempt to acquire Hyundai LNG Shipping late last year, as it could not reach an agreement with the seller.
However, it is difficult for HMM to offer a higher price, as the company itself also needs to find a new owner.
Source: The Korea Times