SIMIC

FOUR bidders have emerged as potential buyers for South Korean liner HMM as the first round of the process begins in South Korea.

Media reports are suggesting that the government favours one of the largest conglomerates to take control of the shipping company. They appear to be seeking to encourage more companies to enter the process, reports The Maritime Executive, Fort Lauderdale, Florida.



The media reports said that Samsung Securities, which is conducting the bidding process, has received initial registrations from two shipping companies, SM Group and Harim, the largest investor in Pan Ocean, another Korean shipping line.



In addition, two conglomerates with operations in the logistics business, LX Holdings and Dongwon Group, are also reported to have registered in the bidding.



The government-controlled banks, Korean Development Bank and Korea Ocean Business Corporation, announced last week that their advisors had said it was possible to proceed with the sale this year despite the downturn in global shipping markets.



Collectively the two banks hold approximately 40 per cent of the shares of the company, but with their convertible perpetual bonds, the ownership stake could rise to approximately 75 per cent of HMM, if everything was converted into shares.



The current value of the 40 per cent equity shares is set at US$3.9 billion, although the banks have indicated in their announcement that the plan would be to sell approximately 58 per cent by converting a portion of the bonds.



They said they would consult with the winning bidder to determine a plan to sell the remaining bonds in a means not to disrupt the market. If all the bonders were converted, at current market prices, the stake in HMM would be valued at nearly $8 billion.



The chairman of KDB previously told reporters that several candidates had shown interest in acquiring HMM, without naming any potential bidders. They are looking for a large Korean company to take control of HMM seven years after the government bailout of the former Hyundai Merchant Marine.