Friday, May 10th, 2013
SEOUL, KOREA - Hyundai Merchant Marine will invest 800 billion won in a project to build a new container dock for the New Busan Port that has anguished for six years now. The company, in cooperation with Hyundai Development Co., will participate in the project as a build-transfer-operate partner.
According to investment banking sources on May 8, Hyundai Merchant Marine decided to take part in the container dock construction project that Hyundai Development has been working on since 2009 as a co-developer. The amount of actual cash investment the two companies will make is 160 billion won, 20 percent of the 800 billion won needed for the construction. The remaining 640 billion won will be borrowed from banks in the form of a syndicated loan.
Despite the difficult financial situation, the reason Hyundai Merchant Marine has decided to invest in the project has to do with the fact that it wishes to prepare for the future. Considering the global shipping business cycle is expected to peak by 2018 when the dock construction would be completed, the company figures that the new container port would be a cash cow.
A person close to the deal said, "For a year Hyundai Development has had trouble looking for a partner for the dock construction after Hanjin Shipping broke away from the consortium. Fortunately the company found a new partner in Hyundai Merchant Marine which itself was looking for investment targets."
Since Hyundai Development went independent from the parent group in 1999, it has not worked with any of the group companies even though it holds 1.3 percent of Hyundai Merchant Marine shares.