Oceans and Fisheries Minister Cho Seung-hwan has drawn criticism from minority shareholders of HMM, formerly known as Hyundai Merchant Marine, because of his recent remarks that the ministry is not considering privatizing the profit-making shipping company in the near future.

Raising concerns over the possibility of the delayed privatization deteriorating HMM’s valuation amid the global shipping industry downturn, the minority shareholders regarded the ministry’s lukewarm stance as an attempt to maintain its authority over the shipping industry.

“HMM’s minority shareholders should give support to President Yoon Suk-yeol’s efforts to downsize government-owned assets,” one of the minority shareholders wrote online.

Last Thursday, Cho told reporters that HMM and Daewoo Shipbuilding & Marine Engineering (DSME) should be viewed separately in terms of privatization. He said that the timing of privatization depends on each company’s valuation and the environments surrounding each industry.

His remarks came after expectation has been raised about HMM’s privatization in the near future, since the shipping company’s largest shareholder, Korea Development Bank (KDB), signed a conditional agreement with Hanwha Group last month for the latter’s acquisition of DSME. KDB Chairman Kang Seog-hoon also said recently that “HMM is fully normalized in its operation and it is subject to sale.”

The maritime minister, however, said that the ministry will remain cautious about the timing of HMM’s privatization, although it is definite that the shipping company should be sold.

“If HMM is sold without talks among relevant ministries, I should resign,” he said.

In response to growing fears that the global shipping industry has already peaked, he answered that the government has taken into account various factors, such as HMM’s cash reserves and stock price.

“Considering its stock price, its privatization will not be impossible even after next year,” he said.

In addition, the minister emphasized that HMM will not be sold to a foreign company or a private equity firm. At this moment, Hyundai Motor, POSCO and SM groups are among potential buyers of the shipping company.

In contrast to the KDB, the maritime ministry has remained reluctant about HMM’s privatization, even under the previous Moon Jae-in administration. Cho’s predecessor, Moon Seong-hyeok, said in March that HMM’s management conditions need to be stabilized further over the next two to three years.

HMM has been under the control of the KDB since the slump in the shipping industry in 2010. The state-run bank holds a 20.69-percent stake in HMM as its largest shareholder, while the Korea Ocean Business Corp. (KOBC), under supervision of the maritime ministry, owns a 19.96-percent stake as the second-largest shareholder.

Source: Hellenic Shipping News