[THE INVESTOR] Come Aug. 5, Hyundai Merchant Marine will begin a new chapter in its 40-year history, breaking free from Hyundai Group and becoming a subsidiary of Korea Development Bank.

The soon-to-be owner is bent on installing a new leadership at the shipping line and is open to hiring a foreigner as its chief executive, according to sources at the state-run lender.  

“A CEO-recommendation committee is to launch soon, comprising representatives of various related parties,” said a KDB official.

The recruitment process will start as soon as the ownership change is complete, he said. 

KDB and other creditors of HMM are to swap their loans to the ailing shipping line into stocks on Aug. 5 as part of an agreed bailout plan.

The swap deal will increase the combined stake held by the creditors to nearly 40 percent. 

HMM’s current controlling shareholder Hyundai Group will see its 22.64 percent stake, held jointly by group chairwoman Hyun Jeong-eun, Hyundai Elevator and Hyundai Global, reduced to 3.64 percent in a 7-to-1 capital reduction approved by shareholders Friday.

A debt-to-equity swap will further shrink that stake to just 0.5 percent.

The KDB, under fire for lax management of subsidiary Daewoo Shipping & Marine Engineering, would want to assemble a high-performing leadership team for HMM, observers said.

According to local reports, KDB chairman Lee Dong-geol emphasized performance above anything else in recruitment of the new CEO. 

A turnaround and management consulting firm will be hired for HMM, which will face same hardships as the global shipping industry continues to suffer from overcapacity and a low maritime trade.

In a desperate effort to stay afloat and repay its debts, HMM has made a series of asset sales, including the liquefied natural gas transportation business, the bulk shipping division and stakes in port terminals. 

In June, the firm also cut charter rates it pays to ship owners by 21 percent after a long and grueling negotiation. Last week, it signed on to join the 2M alliance, the vessel sharing partnership founded by Maersk and MSC, from April next year.

Creditors have said the firm should focus on operations of very large, high-efficiency vessels and continued cost reductions after the bailout.

Hyundai Merchant traces its root to ASEA Shipping, founded in 1976 by the late Hyundai Group founder Chung Ju-yong with just two ships built by his own Hyundai Heavy Industries. Hyundai Group’s current chairwoman Hyun is the widow of his fifth son Chung Mong-hun.

By Lee Sun-young (milaya@heraldcorp.com)