South Korean Shipping Giants Unite Through Massive Tanker Swap
South Korea's shipping industry is undergoing significant changes as two major companies, SK Shipping and H-Line Shipping, engage in a massive tanker swap. The deal will see SK Shipping receive 16 liquefied natural gas (LNG) vessels and their long-term contracts from H-Line in exchange for 12 tankers, their contracts, and approximately $300 million in cash.
The swap is part of a years-long effort to consolidate the South Korean shipping industry. As a result of this deal, SK Shipping will become one of the world's largest operators of LNG carriers, while H-Line will emerge as a leading tanker and bulk-shipping company in Asia.
Hahn & Co, the private equity firm that owns both companies, created H-Line by acquiring Hanjin Shipping's dry-bulk operations in 2014 and adding Hyundai Merchant Marine's long-term dry-bulk business in 2016. In 2018, Hahn & Co acquired about 80% of SK Shipping from SK Group.
The deal comes at a time when the energy trade is being significantly impacted by conflicts in the Persian Gulf. The combined fleet of both companies will offer relatively predictable cash flows in an industry known for sharp swings in freight rates.