Hyundai Merchant Marines (HMM), South Korea's No. 2 shipping operator, said Thursday it has received 500 billion won (US$494.4 million) in cash from the sale of its liquefied natural gas (LNG) operations.
The sale to IMM Consortium has been completed with the transfer of money, and seven of its LNG ships, along with related personnel, have been transferred to the newly created Hyundai LNG Shipping Co., the company said.
The deal between the shipping line and the consortium, made up of IMM Private Equity and IMM Investment, was signed on April 30 following months of negotiations.
Of the money received, HMM reinvested 100 billion to a 20 percent stake in the new operator, with the rest of the company being owned by IMM. The total fleet size stands at nine with two more tankers joining the new shipping line.
"Besides the inflow of cash, the deal allowed HMM to turn over 470 billion won in debt that its LNG operation has accrued over the year to the new corporate entity, which will significantly reduce its debt obligations," a company source said.
"The company's debt rate stood at 1,300 percent at the end of the first quarter, but this should come down significantly once the figures are tallied for the second quarter," he said, without going into details.
Despite the sale of its LNG tankers, HMM still has some 160 container ships and bulk carriers in its fleet.
Related to the latest arrangement, Hyundai Group, the parent conglomerate of the shipping line, said out of the 3.3 trillion won self-help measure announced late last year, it has generated more than 2 trillion won, or 60 percent, of its target so far.
The money came from initial payment received from the sale of Hyundai Securities Co., disposal of a shipping terminal in Busan, and the sell-off of various other real estate and stock holdings.