South Korea’s cash-strapped Hyundai Merchant Marine Co. is selling 40 percent plus one share in Hyundai Pusan New-Port Terminal Co. in southern coastal city of Busan with annual capacity to handle 2.47 million twenty foot equivalent unit (TEU) of cargoes to the Port of Singapore Authority (PSA) at about 100 billion won ($85.7 million) to solve some of its immediate liquidity woes. The shipping company owns 50 percent plus one share in the port terminal.
According to investment bank industry sources on Sunday, Hyundai Merchant Marine is expected to sign a contract for transaction with PSA on Wednesday. The sale could come around 100 billion won considering Hanjin Shipping Co. sold its 50 percent plus one share of Hanjin section of the new port terminal at Busan at 135.0 billion won to Hanjin Transportation Corp. late last year.
The deal can be closed after it is approved by the Busan Port Authority and other shareholders, as well as filing for acquisition with the Fair Trade Commission. Negotiations with the PSA took off after the Ministry of Oceans and Fisheries and the Busan Port Authorities gave a go-ahead to Hyundai to find a foreign buyer because of its pending liquidity crisis.
PSA is the largest container terminal operator in the world, and currently is the sole manager of the world’s biggest harbor Port of Singapore. It also opened Incheon Container Terminal in western Korean coast in 2004.
Hyundai Pusan New-Port Terminal was established in 2010 after it was spun off from Hyundai Merchant Marine, which and currently owns 50 percent plus one share. A special purpose company set up by Korea’s IMM Investment Corp. holds the other 50 percent minus one share.
Once the deal is completed, PSA will become the second largest stakeholder with 40 percent plus one share following the special purpose company, and Hyundai Merchant Marine will keep hold of the remaining 10 percent share to ensure profitability in the terminal for its shipping alliance members.
The new port terminal at Busan, which has positioned itself as a shipping hub of Asia, started operation in 2006 with three berths, and presently operates 213 berths in total. Traffic in cargo shipping and transshipment over the years has surged. It recorded operating profit of 43.7 billion won and sales of 150.3 billion won in 2014.