Hyundai Merchant Marine Co. (011200), South Korea’s second-largest sea cargo carrier, led gains among shares of Hyundai Group companies after the conglomerate said it plans to sell assets to raise 3.3 trillion won ($3.1 billion).
Hyundai Group, with businesses from shipping to stock broking, will sell Hyundai Securities Co. (003450), two other financial units, and a hotel to raise as much as 1.3 trillion won, it said in an e-mail yesterday. Hyundai Merchant plans to raise about 1.5 trillion won selling stakes in container terminals and restructuring its bulk-cargo operations, the group said.
Shares of Hyundai Merchant jumped the most in more than six months in Seoul trading as Hyundai Group followed Hanjin Group, which owns Korean Air Lines Co. (003490), in announcing plans to sell assets to boost cash. South Korea’s three biggest shipping companies face a cash crunch as 3 trillion won of bonds are due for repayment in the next two years amid mounting losses from a global slump in rates to carry sea cargo.
“The announcement has helped ease shareholders’ concerns,” Kim Min Ji, an analyst at E*Trade Securities Co., said from Seoul. “The sale of financial units seems realistic and will help Hyundai Group raise cash it needs.”
Hyundai Merchant advanced by the daily 15 percent limit, the most since June 10, to close at 11,600 won. That helped trim the declines this year to 50 percent. Hyundai Elevator Co. (017800), the biggest shareholder of the shipping company, rose 15 percent, and Hyundai Securities climbed 3.1 percent. The Kospi index gained 0.7 percent.
The group plans to seek foreign investment for Hyundai Merchant, and sell additional Hyundai Elevator shares and carry out an initial public offering of Hyundai Logistics Co.
“While the company has sufficient funds to last until the first half of next year, we’ve decided to come up with a restructuring plan to calm investors’ concerns,” Hyundai Group said in the statement. “We plan to continue restructuring the group next year.”
Hyundai Merchant has 1 trillion won of bonds to pay in the next two years, compared with 678 billion won in cash at the end of September, according to data compiled by Bloomberg.
Hyundai Group’s plan comes after Korean Air said last week it aims to raise 3.5 trillion won by selling assets, including shares in refiner S-Oil Corp. and airplanes. The chief executive officer of Korean Air affiliate Hanjin Shipping Co. (000700) resigned in November as the company’s cash dwindled.
Hyundai Group will focus on its shipping, logistics and machinery businesses along with North Korea tourism operations for further growth, according to yesterday’s statement. Hyundai Merchant plans to sell a container-box yard in South Korea as well as real estate it owns in the U.S., China and Singapore.
Hyundai Group plans to sell the financial units by putting them in a special-purpose company, along with other assets, the company said. The group will discuss details of the sale with Korea Development Bank and other creditors, it said.
Hyundai Merchant plans to sell a 22.4 percent stake it owns in Hyundai Securities as well as 9.83 percent held by the brokerage company. Hyundai Securities owns 100 percent of Hyundai Asset Management Co. and Hyundai Savings Bank.
The asset sale is expected to help lower the debt-to-equity ratio of Hyundai Merchant, Hyundai Elevator and Hyundai Logistics to the upper 200 percent level from 493 percent at the end of third quarter, the group said.
The group also expects to reap 340 billion won by selling the Banyan Tree Hotel in Seoul, it said.
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