Creditors of ailing Hyundai Merchant Marine and the government have urged the country's No. 2 shipper to wrap up its negotiations with the owners of chartered ships to cut leasing rates by May 20, threatening to put it under court receivership if it fails to produce tangible outcomes, industry sources said Wednesday.

Last month, the creditors gave the nod to the financially troubled Hyundai Merchant's self-rescue plans including asset sales on the condition that it should complete renegotiations with the owners of chartered ships to lower their charter rates until the middle of May to stay afloat and implement far stronger self-rehabilitation measures.


"We see May 20 as a deadline for the negotiations," said an official at the Financial Services Commission (FSC), the country's financial regulator. "If Hyundai Merchant fails to adjust charter rates, we are left with just one option: court receivership."

The official said the deadline could be delayed a bit, but made it clear that Hyundai Merchant should come up with details.

Since February, Hyundai Merchant has been in talks with ship owners to cut the rates by up to 35 percent, and the negotiations are reportedly in the final stage.

FSC Chairman Yim Jong-yong has said earlier that Hyundai

Merchant and its bigger local rival Hanjin Shipping are under contract to pay charter fees four to five times higher than the current rates by 2026. Their combined payments exceed 5 trillion won ($4.3 billion) by that year, he claimed.

In the shipping industry, freight charges have dropped more than 25 percent from the end of last year, further hurting the bottom line of shipping lines, the top financial regulator said.

Hanjin Shipping, the country's largest shipper, and other smaller shippers have been struggling with falling freight rates amid a protracted slump in the world's economy. (Yonhap)