German shipping line Hapag-Lloyd AG may receive a 923 million-euro ($1.32 billion) cash injection from owners including the city of Hamburg.
German shipping line Hapag-Lloyd AG may receive a 923 million-euro ($1.32 billion) cash injection from owners including the city of Hamburg as the company seeks to bolster its chances of receiving a federal loan guarantee.
The capital increase approved today by the city"s government is more than the 750 million euros that had been previously pledged by shareholders and should fulfil requirements for receiving the 1.2 billion-euro government guarantee, Hamburg"s finance department said in a statement.
Chancellor Angela Merkel"s government will decide by the end of next month whether to grant the container line the guarantee its owners say is needed to boost liquidity as the global economic slump hurts world trade. TUI AG, which owns 43 percent of Hamburg-based Hapag, said Aug. 13 that the company needed total financing of at least 1.95 billion euros.
?The city government today agreed further contributions to stabilize Hapag-Lloyd,? Hamburg"s statement said. ?The city and other owners see the conditions fulfilled for the loan guarantee.?
The company"s other shareholders include German billionaire Klaus Michael Kuehne and lender M.M. Warburg. The cash injection still needs the approval of the Hamburg"s parliament, or Buergerschaft, and of European Union regulators.
German maritime companies including Hapag, ThyssenKrupp Marine Systems and Wadan Yards MTW GmbH are suffering as collapsing world trade crimps demand for shipping. The global container market will decline more than 10 percent this year, according to a June forecast from London-based Drewry Shipping Consultants Ltd.
Germany, the world"s biggest exporter, has been particularly hurt and the government says it will help provided that companies had a working business model prior to the slump.
Hapag had a first half loss of 435 million euros before interest, tax and appreciation as sales fell 24 percent.