Tuesday, July 28, 2009

Hapag-Lloyd gets cash, but not from all shareholders

Hapag-Lloyd will get the cash it needs to continue operating, but it wasn't easy, and, this will not be the end to their problems.

Hapag-Lloyd gave up their ownership in a container terminal to get the money, AND, some of the new investors have refused to give them additional funding.

Their old parent company, TUI, who got stuck with owning a good chunk of the company after the sale almost collapsed earlier this year, will be putting in the bulk of the additional funding.

Mr. Kuehne (of Kuehne & Nagel) has been very vocal about the poor management of Hapag-Lloyd.

Too bad they haven't listened to him, as Kuehne & Nagel is a well run and profitable company.

From The Financial Times

Tui, the German tourism group, is to provide more than two-thirds of the short-term financing needed by Hapag-Lloyd after many of the container shipping line’s other shareholders refused to take part in a rescue deal.

Most of the €330m lifeline will come from the €315m sale to shareholders of Hapag-Lloyd’s 25.1 per cent stake in Hamburg’s Altenwerder Container Terminal, one of the world’s most advanced.

However, Tui, which owns only 43 per cent of Hapag-Lloyd, will have to provide €215m of the price for the container terminal. Of the members of the Albert Ballin consortium that owns the remaining 57 per cent, only Hamburg’s state government and Signal Iduna, the insurance group, agreed to take equity in the transaction after two days of talks. A third shareholder, HSH Nordbank, will provide a €15m loan.

The deal deepens Tui’s involvement with Hapag-Lloyd, only four months after it sold a 57 per cent stake with the intention of getting out of container shipping. Tui faces severe problems in its core package tourism business.

“They are becoming more involved in the container business, not less,” Mark McVicar, a transport analyst at Nomura International, said. Tui said it had agreed to put in fresh capital to secure its investment.

The short-term funding provides only part of the €1.75bn Hapag-Lloyd believes it needs to secure its long-term survival in the face of the economic downturn and container shipping’s worst-ever crisis.

The company lost €222m on €1.1bn turnover in the first quarter of 2009. The failure of most of the Albert Ballin consortium to take part in the deal underlines the divisions that have opened up since the group took its stake in the container line in March. Klaus-Michael Kühne, the logistics entrepreneur who is the second-largest investor, has been particularly critical of the company’s decision-making

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