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Germans abandon hopes of aid

Germans abandon hopes of aid
Germany?s shipowners and yards have abandoned hopes for an extensive rescue package to be provided by the government ahead of a meeting in Berlin tomorrow.

German owners abandon hopes of state aid.

Germany"s shipowners and yards have abandoned hopes for an extensive rescue package to be provided by the government ahead of a meeting in Berlin tomorrow.

?We do not expect the government to open up a new programme with fresh money,? Ralf Nagel, managing director of Germany"s shipowners" association VDR, told . ?We hope that access to existing schemes will be made easier.?

His remarks came as a response to the German national maritime co-ordinator Hans-Joachim Otto, who had again stressed that the government was not prepared to start a special rescue package for maritime industries. When asked by Lloyd"s List about possible measures to support shipowners, Mr Otto"s office said that this could not be answered before the meeting.

Mr Otto will meet representatives of shipowners, yards, port operators, shipping banks and KG houses tomorrow evening at an emergency meeting in Berlin.

The idea of a bad bank for distressed shipping assets was no longer on the shipowners" agenda, Mr Nagel said.

?We talked about it but it was not part of our preparations for the meeting.?

The plan for such a bad bank was made public by Jochen Döhle, managing partner of tramp owner Peter Döhle at a conference last year. According to shipping sources, consultancy Ernst & Young had drawn up a scheme but the majority of owners did not consider it viable.

VDR is eager to diffuse the image of well-off owners, which may influence Berlin"s willingness to grant aid to the industry.

?We will explain that our industry basically consists of small and medium-sized companies, with 60% of the owners holding up to four vessels,? Mr Nagel said.

German owners faced liquidity pressure due to low charter rates or a lack of employment, and funding issues for the newbuilding orderbook, Mr Nagel said. To ease pressure caused by the former, VDR wants to have the rule changed that limits government-backed guarantees for working capital credits to 60% of the loan volume.

The orderbook problem will be far harder to solve. German owners represent a major share of the worldwide orderbook and had planned to finance these orders via the KG market. However, this is no longer viable as German private investors have stopped investing shipping funds.

VDR has commissioned auditing company PricewaterhouseCoopers to undertake a survey of this problem and produce a clear picture of how many orders could be only rescued by government aid only.

However, the orderbook problem does not affect all German owners to the same extent as some stopped ordering newbuildings early on. This means that not all German owners have the same interests in the issue, making a joint approach difficult to achieve, an insider stressed.

For the German yards, financing the existing orders was not the most pressing issue, said Werner Lundt, general secretary of the shipbuilders" association VSM. Orders where financing was uncertain have already been cancelled, he said.

The challenge now was to secure financing for the few potential new orders. While domestic shipbuilders are increasingly focussing on specialised vessels, banks were sceptical whether they can realise collateral in these niches if worst comes to worst. Mr Lundt said he was confident that if the yards managed to find financing partners, they would see new orders.

Mr Lundt is not optimistic about a speedy solution. ?This is not an easy task. Nor it is a new one. I was hoping we would have seen more progress by now, but the process was slowed down by the general election last year.?

Mr Lundt stressed it was important for his member companies to find a solution that was viable for the next couple of years, and not just one that helped to secure one or two fresh orders.


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