HMM Convertible Bonds Near Maturity... KDB "Will Convert for Profit" (Update)

"Switching Naturally Profitable... Not Doing So Constitutes Breach of Duty"

[Asia Economy Reporter Park Sun-mi] As the convertible bonds (CB) of HMM (formerly Hyundai Merchant Marine) held by KDB Industrial Bank approach maturity on the 30th, the conversion of these CBs into shares is expected to take place soon.

At a press briefing on the 14th, Lee Dong-geol, Chairman of Industrial Bank, stated regarding the 300 billion KRW worth of HMM CBs held by the bank, "The conversion price is 5,000 KRW, but the current HMM stock price is around 46,000 KRW," adding, "Converting would obviously yield a profit." He further said, "If there is an opportunity to make a profit, giving it up would constitute breach of trust," emphasizing, "We cannot choose not to convert."

Due to service and cost improvements and route restructuring, HMM announced its best-ever first-quarter performance, which has significantly boosted HMM’s stock price. The Industrial Bank must decide whether to convert the HMM CBs into shares by the 29th. Based on the closing price on that day, with HMM shares at approximately 46,250 KRW, converting and selling the CBs as stock could generate profits exceeding 2 trillion KRW.

Chairman Lee emphasized, "We will obviously convert the CBs into shares," adding, "The money earned this way will later become policy finance resources for the Industrial Bank." Regarding the potential stock price decline following the Industrial Bank’s conversion of HMM CBs, he noted, "The current stock price already factors in the assumption that the bank will convert the CBs into shares in the future."

While announcing plans to convert HMM CBs into shares, Chairman Lee refrained from commenting on rumors of HMM’s sale. He said, "The sale plan must be pursued in a phased manner, considering other factors," and added, "We will take more time to review it." Regarding HMM’s privatization, he dismissed any progress, stating, "There have been no developments," and added, "We will keep the possibility open and consider various factors."