Hyundai Merchant Marine Co., a major shipping line in South Korea, said Thursday that it has signed a deal for strategic cooperation with a global shipping alliance, paving the way for the company to better compete with rivals.

In December last year, Hyundai Merchant agreed with Maersk Line, Mediterranean Shipping Company -- two key members of the 2M Alliance -- on a new strategic cooperation -- slot exchanges and slot purchases between the three.

The initial term of the strategic cooperation is three years with an option to extend and cover key East-West trade.

Since May, Hyundai Merchant has been seeking to become a member of 2M, one of the prerequisites set by its creditors to avert court receivership.

In April, its creditors, led by the state-run Korea Development Bank, approved the shipper's restructuring plan in return for the company meeting three key conditions -- a debt recast, a charter rate cut and inclusion in a global shipping alliance.

The membership in a global alliance is crucial for the shipper to take on bigger rivals amid a glut in capacity, which has led to a drop in freight rates.

Meanwhile, Hyundai Merchant signed a memorandum of understanding with a state-run shipbuilding financing firm last week to sell part of its fleet to receive fresh funding.

Under the deal, Hyundai Merchant will sell 10 container ships at the combined market value of 150 billion won ($131 million) to Korea Shipping Co., versus their book value of 850 billion won. The shortfall will be financed with sales of bonds and stocks to the financing firm.

The measure will help the shipping firm jack up its financial status, Hyundai Merchant said.

Korea Shipping will buy some 100 billion won worth of stocks to be sold by Hyundai Merchant and 600 billion won worth of bonds convertible into the shipper's stocks, according to Hyundai Merchant. (Yonhap)