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Now Korean seafarers try to stop HMM sale: 'don't forget Hanjin'

Now Korean seafarers try to stop HMM sale: 'don't forget Hanjin'
Martina Li 28/11/2023

With just days to go before a preferred buyer is nominated to take the state’s interest in South Korean flagship carrier HMM, South Korea’s national seafaring union has joined calls opposing the deal.

The Federation of Korean Seafarers’ Unions (FKSU) today vowed to stop the sale of HMM to what it called “irresponsible companies”.

Last Thursday, before the one-day tender closed at 5pm local time, Dongwon, South Korea’s largest fishing group, and Harim, parent of Pan Ocean, the country’s largest dry bulk shipping business, submitted their bids to acquire HMM.

South Korean trading and logistics group LX International, which had also been shortlisted, decided not to go ahead.

Korea Development Bank (KDB) and Korea Ocean Business Corp (KOBC), representing the state, are selling shares amounting to a 40.65% stake, which could go up to 57.87% if KRW1trn ($742m) of bonds are converted to stocks. The HMM sale price is estimated between $3.5bn and $7.4bn.

The FKSU said: “No one can deny that behind HMM’s growth was the lonely sacrifice of seafarers who endured highly intensive labour at sea while wages were frozen for 10 years. KDB and KOBC are pushing for an unreasonable sale to recover public funds and investments.

“The companies currently participating in the acquisition are severely lacking in their ability to raise capital. They have no choice but to rely on massive borrowing. If this happens, it will degenerate into a feast of speculative capital focused solely on recovering investment, to the detriment of workers. This will lead to suffering.”

The union asked the government not to forget the collapse of Hanjin Shipping in 2016, and said HMM’s seafarers felt insecure about their jobs.The carrier’s unionised workers demonstrated outside KDB’s building in Seoul twice this month.

Dongwon or Harim could be chosen by year-end. HMM came under state control in 2016, after swapping debt for equity. KDB believes the time is ripe to wean HMM off government support.

Dongwon Group, which put forward 3PL subsidiary Dongwon LOEX as the bidder for HMM is reportedly considering taking on more debt through bank loans and issuing convertible bonds, and considering more fundraising by listing its US tuna-processing subsidiary, StarKist.

Harim is working with compatriot private equity player JKL Partners, which helped it 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.