Hyundai's self-rescue plan meets mixed response

The Financial Services Commission officially denied Monday that it had advised or pushed for a merger of the nation's two largest shippers, Hanjin Shipping and Hyundai Merchant Marine.

Earlier, the JoongAng Ilbo had reported that the government was moving to merge the two national flag carriers by force as part of its restructuring scheme for ailing industrial sectors.

Hanjin acknowledged that it had been called on by the government to examine the possibility for the merger late last month. "After studying the plan, however, we conveyed our opinion to the authorities that it was realistically difficult," a Hanjin official said.

Yet the eyes of industry watchers are on Hyundai Merchant Marine (HMM) ― and its parent, Hyundai Group ― as the troubles they are facing have led to these speculative reports.

Hyundai Group is considering abandoning control of its shipping unit, and has already delivered such intention to its main creditor, the Korea Development Bank (KDB), according to government, financial and business officials. The group will instead have Hyundai Elevator buy out HMM's equities in other, financially sounder subsidiaries, such as Hyundai Securities and Hyundai Asan.

If this and other major thrusts of Hyundai Group's interim self-rescue plan get the go-ahead from the KDB, the group will submit its formal restructuring schedule by the end of this month, officials said.

In 2010, Hyundai announced its first self-help scheme that called for raising 3 trillion won ($2.61 billion) or more by selling Hyundai Logistics, and Hyundai Merchant Marine's LNG transport and container ship divisions, and carried out more than 90 percent of it. Now, it has to shed additional fat, industry sources say, because of the abortive sell-off of its brokerage unit and a prolonged slump in the shipping industry. Despite its longstanding status as Hyundai Group's flagship unit, the shipping company sustained a net loss of 210.3 billion won in the first half of this year alone.

Hyundai Group, which specializes in shipping, securities and elevators and also known for its inter-Korean initiatives such as the now-suspended tours to Mount Geumgang in North Korea, is operated independently from Hyundai Automotive Group.

Responses to Hyundai Group's latest self-help plan are mixed. Some government ministries, which have pushed for the forced merger of shipping companies behind the scenes, welcomed the move. However, the KDB is reportedly negative about the scheme, comparing it to a "lizard that cuts off its tail to save the body," they said.