HMM to impose fuel surcharge, issues $883m long-term bonds
Seoul-listed Hyundai Merchant Marine has issued Won1trn ($883m) of long-term bonds as the South Korean carrier is actively expanding its fleet, according to exchange filings.
Korea Development Bank, HMM’s largest shareholder, is to buy Won400bn of convertible bonds and Won600bn of warrant bonds - both have a maturity of 30 years - and then sell 50% of them to state-owned Korea Ocean Business Corp under the same conditions.
Warrant bonds allow investors a call option to buy the issuer’s shares at a fixed price.
A KDB official had confirmed the issuance earlier, although the actual size in the announced plan was higher.
HMM, which reported about $1.1bn net losses in 2017, signed a contract to build 12 23,000 teu and eight 15,000 teu boxships at Daewoo Shipbuilding & Marine Engineering, Samsung Heavy Industries and Hyundai Heavy Industries.
The order is part of the company’s goal to reach a carrying capacity of 1m teu.
Separately HMM said it would be imposing a fuel surcharge in January 2019 to account for the expected increase in fuel costs as a result of the IMO 2020 sulphur emissions regulations.
The company joins other large container lines such as Maersk, CMA CGM, MSC and most recently OOCL, that have also announced extra bunker charges to deal with the higher cost of low sulphur fuel.
Like the others, the specific amount of the surcharge was not disclosed.
27 October 2018