Final Breakdown of HMM Sale Negotiations... Creditor Group Management System Maintained

Korea Development Bank, Korea Ocean Business Corporation-Harim Consortium Fail to Narrow Differences

As the HMM acquisition battle officially begins, the HMM headquarters located in Park One Tower, Yeouido. Photo by Jo Yongjun jun21@

The final negotiations for the sale of HMM, which took place over seven weeks, have collapsed.

On the 7th, KDB Industrial Bank and the Korea Ocean Business Corporation announced that they had selected Harim Group's Pan Ocean and the JKL consortium as the preferred negotiation partners for the sale of the container shipping company HMM and proceeded with negotiations, but the talks ultimately broke down.

The Industrial Bank explained, "During the seven-week negotiation period, both parties engaged in sincere negotiations based on mutual trust, but the negotiations ultimately failed due to disagreements on certain issues."

The negotiation deadline was initially set for the 23rd of last month but was extended once to the 6th of this month. Although the prolonged and difficult negotiations reportedly gained momentum after the Harim consortium withdrew a significant portion of its previous demands, the parties ultimately failed to bridge their differences.

The Harim consortium proposed limiting the validity period of the shareholders' agreement to five years and applying exceptions to the deadline for the sale of shares held by JKL Partners, a private equity fund participating in the consortium, but the sellers consistently maintained that they could not accept these terms.

Subsequently, Harim requested a three-year deferral on the conversion of the remaining perpetual bonds held by the sellers into shares, but withdrew this request following opposition from the sellers. The Industrial Bank and the Korea Ocean Business Corporation hold perpetual bonds worth 1.68 trillion won, which include call options (early redemption rights) exercisable this year and next year, in addition to shares.

With the collapse of the sale, the sellers, Industrial Bank and Korea Ocean Business Corporation, will retain their 57.9% stake in HMM and maintain the creditor-led management system. The Industrial Bank and Korea Ocean Business Corporation will need to pursue the HMM sale process again in the future.

An investment banking (IB) industry insider said, "Since the parties could not narrow their differences over detailed conditions, uncertainty has increased," adding, "It seems unlikely that the Industrial Bank and Korea Ocean Business Corporation will immediately push for a resale of HMM."

This content was produced with the assistance of AI translation services.