Sale progress begins for $3.9 billion-valued HMM

State-run Korea Development Bank (KDB) and the Korea Ocean Business Corporation (KOBC) have initiated the sale process for HMM, Korea's largest container shipper, after issuing a notice on Thursday.

HMM's Hamburg container ship [YONHAP]

State-run Korea Development Bank (KDB) and the Korea Ocean Business Corporation (KOBC) have initiated the sale process for HMM, Korea's largest container shipper, after issuing a notice on Thursday.

The stake up for sale is 38.9 percent or 399 million shares of HMM which could be worth up to 5 trillion won ($3.9 billion).

In the bidding, a preferred suitor will be selected and sign an agreement this year through a two-stage process.

The sale would also involve perpetual bonds held by KDB and KOBC. The remaining perpetual bonds will be converted gradually based on HMM's exercise of its redemption rights.

"The convertible shares will be handled in consultation with the acquirer in a way to minimize their impact on the market," wrote KDB in a joint release on Thursday.

In April, the two state-run institutions appointed Samsung Securities, Samil PwC and Lee & Ko law firm as the advisors for the sale of HMM in April.

KDB said that the advisors concluded that it was feasible to pursue the sale of HMM this year through a consultation. Yet finding potential acquisition candidates has been challenging due to factors like high acquisition costs, management of perpetual bonds, and the complexities within the maritime industry.

The government hopes for a local conglomerate with the capacity to stably operate HMM to take over the company.

"Several candidate companies have been identified to show interest in acquiring HMM," Chairman Kang Seog-hoon of KDB said in a press conference in June. "Given the significance of HMM as a national shipper, we hope a company that is strongly committed to contributing to the Korean maritime industry through the acquisition, and possess the necessary financial and managerial capabilities, become an acquirer."

While Korean corporations like Hyundai Motor and Posco have been cited as potential candidates for acquiring HMM, SM Group expressed their intention to acquire HMM in a recent media interview.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]