Hapag-Lloyd"s owners have returned a stake in a Hamburg container terminal to the struggling German ocean carrier in order to qualify for $1.7 billion of state-backed loans.
Hapag-Lloyd"s owners have returned a stake in a Hamburg container terminal to the struggling German ocean carrier in order to qualify for $1.7 billion of state-backed loans. A company formed by shareholders TUI and the Hamburg-based Albert Ballin consortium paid Hapag-Lloyd $447 million for its 25.1 percent stake in the CTA terminal to ease the carrier"s liquidity problems.
But the German government demanded the return of the stake to Hapag-Lloyd as collateral for guaranteeing commercial bank loans to the carrier.
Hanover-based TUI and the city of Hamburg, a member of the Albert Ballin consortium, which jointly financed the acquisition of the CTA stake, have agreed to return it to Hapag-Lloyd following the government"s intervention.
Hapag-Lloyd will keep the $447 million CTA proceeds, which formed part of a capital increase agreed by its shareholders last month.
Tourism group TUI will transfer its $308 million share of the CTA acquisition into a hybrid loan, or equity, in Hapag-Lloyd, a company spokesman said. The city of Hamburg also agreed to increase hybrid capital in the carrier.
The agreement between TUI, which owns 43.3 per cent of Hapag-Lloyd, and the Albert Ballin consortium, 56.7 percent, paves the way for a government decision on loan guarantees of up to $1.7 billion.
It isn"t clear whether the government will make its decision before or after Germany"s general election scheduled for September 28, the TUI spokesman said.
Hapag-Lloyd"s shareholders agreed in August, to increase a cash injection to $1.3 billion from an initially planned $1 billion. TUI has said the carrier needs around $2.5 billion to survive the slump in the container shipping market.
The shareholders were under pressure to meet the government"s demands with analysts saying the world"s sixth largest ocean carrier could run out of cash in October.
Hapag-Lloyd expects an operating loss of between $700 million and $1 billion in the second half of the year, Platow Brief, a German financial newspaper said, citing internal company documents.
Hapag-Lloyd posted a $275 million second quarter loss against a year-earlier profit of $164.5 million, swelling first half losses to $622 million from $190 million in the first six months of 2008.