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Ship owners on Wednesday broke off rate negotiations with struggling South Korean shipping conglomerate Hyundai Merchant Marine without reaching an agreement, according to multiple reports
from Korean media outlets. Korean media outlets are reporting that containership owners on Wednesday broke off talks with struggling shipping conglomerate Hyundai Merchant Marine (HMM) to
reduce charter rates. Reports from Korea's _Yonhap_ news agency and the _Korea Times_ both said negotiations failed to result in an agreement. _Korea Times_ quoted Park Chan-ho,
a Korea Development Bank spokesman as saying, "The negotiations are over now. We have no options but to file for court receivership if the ship owners do not cut their fees. We will
resume the talks only when we think we really need it." The two media outlets differed on the number of charterers involved in the talks: _Yonhap_ said there were five shipowners,
while _Korea Times_ said there were four. Companies currently chartering ships to HMM include the publicly listed firms Danaos Corp. and Navios Maritime Partners, both listed on the New
York Stock Exchange, as well as Capital Product Partners, L.P., which is traded on the NASDAQ. According to information on their various websites, Danaos has 15 ships chartered to Hyundai,
while Navios and Capital Product Partners L.P. each have five. Charterers are reportedly being asked to cut rates by as much as 30 percent. John Coustas, the chief executive officer of
Danaos, in a May 5 conference call with analysts also said Hyundai was seeking a 30 percent cut in charter rates, according to a transcript of the call published by investment advisory
Seeking Alpha. According to that transcript, Coustas mentioned charter rate negotiations with Korea's other large container liner company as well. “With Hanjin we have not reached
the stage of discussing let’s say amounts or whatever structure of reductions," he said. "Just they have announced the general notion of renegotiating charter rates.” In
Danaos's first quarter earnings release, Coustas said, “Several liner companies, including Hyundai Merchant Marine and Hanjin Shipping, two of our largest customers, have publicly
announced their intentions to restructure their balance sheets and seek concessions from charter owners in an effort to reduce their operating costs. These events are still unfolding and
have not come to any resolution and we cannot speculate now how they will conclude.” He said Danaos was “approaching these discussions with the goal of maintaining the value of our
charter contracts.” Capital Product Partners said HMM, one of the company's largest charterers by revenue, "has engaged in a restructuring process, which, even if completed
successfully, could potentially result in a substantial loss of revenues for the partnership.” TO CONTINUE READING THIS ARTICLE... ALREADY HAVE AN ACCOUNT? SIGN IN CREATE A FREE ACCOUNT No
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