Troubled waters
July 28, 2009
Hapag-Lloyd has been suffering record losses since the global recession started to bite into the international trade and cargo business. But the world's fifth biggest cargo shipping company has now secured what it hopes will pave the way for state aid to help the company through the economic downturn.
A consortium of investors on Tuesday agreed to buy stakes in a Hamburg container terminal owned by Hapag-Lloyd. The shipping company stands to receive 315 million euros through that move.
Hannover-based TUI, which holds 43 percent of Hapag-Lloyd, said in a statement that the 25.1 percent stake in the Altenwerder Container Terminal would be bought by a company founded by shareholders of TUI and investment group Albert Ballin GmbH & Co. KG. TUI will contribute 215 million euros. The city of Hamburg is injecting 76 million euros, and the insurance company Signal Iduna is taking a 24 million euro stake. Hamburg's HSH Nordbank will contribute an additional 15 million euros as a loan.
The plan calls for "Hapag-Lloyd to repurchase its share as soon as the economic situation permits," a statement released by the company said.
Hapag-Lloyd's shareholders "have agreed in principle to reach a decision over the next few weeks" on financing measures to support the company over the long term, the statement adds. So the fresh money is only the first step.
Hopes are pinned on guarantees from Berlin
According to TUI, the cash-strapped shipping company will apply for government guarantees on top of the 330 million euros. Hapag-Lloyd reportedly needs as much as 1.75 billion euros in fresh capital to weather the storm.
In the first quarter of 2009, the company lost 222 million euros and the situation on the market has not improved since then. In 2008, the company still brought in a profit of 211 million euros, but the economic slump has hit the entire shipping sector hard.
With the situation of the company deteriorating, securing new loans will also become increasingly difficult. Only recently, Hapag-Lloyd was downgraded by the Moody's rating agency. The Hamburg-based shipping company employs around 8.000 people.
ai/Reuters/AP
Editor: Neil King