The meeting on May 31 and June 1 and will take place at the Hyundai Group’s building in Seoul.
The gathering will pick up where a March 18 meeting between HMM and bondholders with 120 billion South Korean won ($109.18 million) that matured April 7 left off. HMM at that time was unable to persuade creditors to extend the maturity period of their bonds.
HMM is asking bondholders to swap 50 percent of their outstanding loans for equity in the company along with a two-year suspension of repayments. The remaining half would be repaid over the three years following the suspension period, effectively extending the time to maturity by five years. The 1 percent annual interest on the principal loan would be paid quarterly during this time.
If HMM can get its bondholders to agree to these terms, then its institutional creditors would swap somewhere between 50 and 60 percent of their debts for equity in HMM and forego payments on the remaining debt for the next five years. After that time, HMM would make regular payments over five years, extending the maturity of that debt by 10 years.
It is essential for HMM to secure these concessions from its bondholders as its banks view them as critical to the restructuring of HMM’s debt of 804.3 billion won.
HMM is optimistic it can accomplish this and cites the success of the STX conglomerate when it was in similar financial straits in 2013.
"Assuming the bondholders reject our proposal and the company comes under court protection, the bond holders may recover less than 20 percent of the principal amount," an HMM official said.
HMM is South Korea’s second-largest container line and recently had its debt repayments put off until June 29 as banks performed due diligence to determine the feasibility and best course for restructuring the company’s debt.
The carrier is also working to secure a reduction in charter rates of 30 percent so its largest creditor, the Korea Development Bank, will swap debt for equity.
