News / HMM workers protest against 'hasty sale' to 'mid-sized concerns'

Fearing threats to their job security from a potential sale of HMM, carrier employees demonstrated outside the Korea Development Bank building in Seoul today.

The liner’s main shareholders, KDB and Korea Ocean Business Corp, representing the state’s interest, plan to sell a majority stake in HMM, as they feel it is time it was released from government support.

Forty unionised shore-based and seafaring staff denounced attempts by KDB and KOBC to sell HMM to what they deem “mid-sized concerns” a day after due diligence into HMM’s three suitors, Harim Group (working with JKL Partners), LX International and Dongwon Group, was completed.

Jeon Jung-geun, head of HMM’s seafarers’ union, said: “With the acquisition candidates’ questionable ability to raise equity capital, the question is whether the sale will really help national development. There are serious concerns.

“If the bidder focuses only on recovering capital returns, it may lead to poor management that misappropriates HMM’s reserves, so the hasty sale must be stopped immediately. We need an owner that can nurture HMM to prevent the [domestic] shipping industry from being ruined.”

The state took control of HMM after swapping debt for equity in 2016.

KDB and KOBC expect to name a preferred bidder this month and conclude the sale by year-end. They plan to sell a 40.65% stake, which could increase to 57.87%, if KRW1trn ($742m) of bonds are converted to stocks. The sale price is estimated between KRW5 trillion ($3.5bn) and KRW10 trillion ($7.4bn).

Lee Ki-ho, head of HMM’s office finance workers union, said: “The shipping industry has a great impact on the nation. We need to form a consensus so that a hasty sale will not bring shame.”

Reportedly, HMM’s staff have been spooked by Maersk Line’s 10,000 headcount loss as huge Covid-fuelled profits evaporate.

All three of HMM’s suitors have equities that are below the shipping company, resulting in them having to sell assets to raise funds. This has given rise to talk of a “winner’s curse”, as speculation mounts that any new owner will struggle to take HMM forward.

Pan Ocean, Harim’s shipping unit, has sold several tankers and all its shares in Korean Air Lines’ holding company, Hanjin KAL, while Dongwon is initiating a public listing of its US tuna processing subsidiary StarKist. LX Group, which had cash holdings of around $2bn as of 30 June, is widely seen as the strongest contender, but there are rumours of it withdrawing from the sale due to the deteriorating market.

Last week, industry stakeholders and civic groups in Busan called for HMM to be formally nationalised.