South Korea’s Dongwon Group and Harim Group will be vying to take control of the country’s flagship box line HMM.
Dongwon, South Korea’s largest fishing group, and Harim, parent of the country’s largest dry bulk shipping business Pan Ocean, submitted their entries when the one-day tender closed at 5pm local time on 23 November.
South Korean trading and logistics group LX International, which with Dongwon and Harim, had been shortlisted in a preliminary round, decided not to go ahead.
Explaining its decision, a representative of LX International said, “Considering the market situation and business environment comprehensively, we decided not to participate.”
Korea Development Bank and Korea Ocean Business Corporation, representing the state’s interests in HMM, will review the bidders’ financial status, management capabilities, and their plans to develop their shipping business.
A preferred bidder is expected to be chosen as early as this month or by year-end.
KDB officials said that a preferred buyer will take up to two weeks to be selected, after consulting with relevant bodies.
On 22 November, South Korea’s Minister for Oceans and Fisheries Cho Seung-Hwan told reporters that the competencies of all bidders will be carefully evaluated.
KDB and KOBC are selling shares amounting to a 40.65% stake, which could go up to 57.87% if KRW1 trillion (US$742 million) of bonds are converted to stocks, whose price is estimated between KRW5 trillion (US$3.5 billion) and KRW10 trillion (US$7.4 billion).
The bidders’ funding ability is therefore key to being favoured by HMM’s stakeholders.
Dongwon Group, which put forward its 3PL subsidiary Dongwon LOEX as the bidder for HMM is reportedly considering taking on more debt through bank loans and issuing convertible bonds. There have also been reports in the local media that Dongwon could sell some of its properties and shares in its affiliates
The group is also considering more fund-raising by listing its US tuna-processing subsidiary StarKist.
Dongwon hopes that with HMM under its umbrella, it can mature into a comprehensive shipping and logistics group.
Harim Group is working with compatriot private equity player JKL Partners, which also helped it to acquire Pan Ocean in 2015, to secure finance. Pan Ocean has already sold some tankers and all its shares in Korean Air Lines’ holding company Hanjin KAL.
Martina Li
Asia Correspondent
