Investor shuffle for Hapag-Lloyd

TUI has been trying to sell off it's remaining holdings of Hapag-Lloyd.
Bloomberg News has the inside scoop of what might be reported within a couple of days.

The city-state of Hamburg may become the largest shareholder of shipping company Hapag-Lloyd AG, Frankfurter Allgemeine Zeitung reported, without citing a source for the information.

Hamburg may pay 420 million euros ($555 million) to TUI AG (TUI1) to boost its stake in Hapag-Lloyd to more than 37 percent from 23.6 percent, the newspaper said in an advance copy of an article in tomorrow’s edition.

Billionaire shipping magnate Klaus-Michael Kuehne is ready to pay TUI 160 million euros to increase his 24.6 percent stake while insurers Hanse-Merkur and Signal Iduna plan to pay 13 million euros and 7 million euros respectively for shares in the shipping company held by TUI, the newspaper said.

The plans are part of an agreement with TUI that may be completed on Feb. 14, FAZ said. TUI’s stake in Hapag-Lloyd will probably shrink to around 20 percent from 38.4 percent, the newspaper said.

Daniel Stricker, a spokesman for Hamburg’s financial authority, and Robin Zimmermann, a spokesman for TUI AG (TUI1), both said separately that TUI and Hamburg-based Albert Ballin’s investment group, which comprises Hamburg’s state government, Kuehne, Signal Iduna, Hanse-Merkur, M.M. Warburg & Co. and HSH Nordbank AG, are in “advanced talks.”

Details reported on the stakes are “pure speculation,” said Stricker, who also said he can’t exclude that TUI may make an announcement on a possible agreement on Feb. 15 at its annual shareholder meeting.

Moody downgrades Hapag-Lloyd

Moody's has downgraded the outlook for Hapag-Lloyd. This should come as no
surprise, considering how bad the results have been for all container carriers.

I rather doubt TUI will find anyone to buy the rest of their stake in this
company.

At least, not for what they are asking.

From The Journal of Commerce

Moody’s has changed its outlook for Hapag-Lloyd to “negative” from “stable” after the German carrier had a “weaker than expected performance” during the first three quarters of 2011.

The downgrade of Hapag-Lloyd’s outlook comes as TUI attempts to sell its 49 percent stake in the company. Standard and Poor’s in September downgraded the company’s outlook from “stable to negative,” citing lower than expected first-half year profitability.

Hapag-Lloyd has been one of the few container lines to stay in the black over the last three quarters. A $54.5 million profit total in the last two quarters offset a $31.8 million loss in the first quarter.

Moody’s said the container shipping industry has performed poorly because an oversupply of capacity has forced carriers to pull down rates. The rating’s agency said the highly competitive industry would be further challenged as new capacity is deployed next year.

“These factors have exerted pressure on operators to expand their market shares, making it difficult for the companies in the sector, including HL, to pass on material cost increases, despite good traffic volumes,” Moody’s said.

The ratings agency said Hapag-Llody has a strong business model featuring solid market shares and a flexible cost base. Moody’s said the company’s liquidity profile is adequate, with all of Hagag-Lloyd's new shipbuilding scheduled for delivery over next two years fully financed.

The ratings agency reaffirmed Hapag-Lloyd’s B1 corporate family rating and probability of default rating. Moody’s also reaffirmed the company’s B3 unsecured rating assigned to the $629.7 million and $250 million worth of senior unsecured notes maturing in 2015 and 2017, respectively.

TUI to sell remaining interest in Hapag-Lloyd

Back when TUI did the deal with a group of investors to buy part of Hapag-Lloyd,
part of the deal was an option for Albert Ballin (the investor group), to
buy the remaining interest of TUI in Jan. 2012.

Albert Ballin probably has second thoughts about this.

I don't know the terms, but guess they will probably have to buy the rest
of the shares at the previously agreed price.

From Bloomberg News

TUI AG (TUI1) plans to sell its remaining stake in the Hapag-Lloyd AG container-shipping business in January and expand further in Russia and China as the German tour operator redefines its business model.

“We looked for ways to exit Hapag-Lloyd such as finding a new investor or doing an initial public offering, but without having the chance to succeed we’re back to our right to tender our stake,” Chief Financial Officer Horst Baier said yesterday in an interview in Frankfurt. “Assuming we get all the approvals, we’ll execute our option on Jan. 2.”

TUI sold a majority stake in Hapag-Lloyd, Germany’s biggest container line, to Hamburg-based investment group Albert Ballin GmbH in March 2009. The travel company still owns 38.4 percent and has the option to sell a stake to Ballin on Jan. 2.

With an exit from shipping, Hannover-based TUI will be better suited to optimize its tourism business with expansion in Russia as well as China and India, the CFO said. In China, TUI plans to boost its trade in sending tourists to Europe.

“We are currently No. 5 in Russia and plan on becoming No. 2 in the next two-to-three years,” Baier said. “In Asia, we are at the very beginning of our journey, but plan to expand in China and India.”

Baier said the company is “pushing” online offerings and already has about 70 percent of destinations online in Scandinavia, while the percentage is “weaker” in Germany. The company also wants to expand market share in the German-speaking market for cruises, the CFO said.

“It’s frustrating to see how Europe’s debt crisis has affected the real economy and investor sentiment, however we had other years where we had some insecurity and where things cooled down,” Baier said. “We should wait a little bit more to see the outcome of the crisis.”

TUI is scheduled to report yearly earnings on Dec. 14.

The shares dropped 3 percent to 3.89 euros at the close of trading in Frankfurt today, the lowest since Oct. 5. They have fallen 63 percent this year.

Who will own Hapag-Lloyd?

TUI would really like to sell the rest of their stake in Hapag-Lloyd.

Problem is, once again the economy is not favorable, and their talks
with investors have gone nowhere.

I suspect that in Jan. 2012 the Albert Ballin consortium will end up with the rest of TUI's shares.

From The Journal Of Commerce

Report quotes majority shareholder saying clarity on ownership structure needed

Hapag-Lloyd is ruling out an initial public offering in the next 12 to 15 months, according to the German ocean carrier’s majority shareholder.

“As long as we don’t have clarity about the final ownership structure, an IPO is not going to come. I don’t see it in the next 12-15 months,” Karl Gernandt, CEO of Kuehne Holding, told the Financial Times. Kuehne is member of the Albert Ballin consortium that controls 61.6 percent of container ship operator.

German tourism group TUI holds the remaining 38 percent stake in Hapag-Lloyd, which it wants eventually to divest. It sold an 11.3 percent stake to the Albert Ballin investors in May.

Gernandt, chairman of Kuehne+Nagel, the Swiss global logistics group, said talks with Oman and Chinese investors about acquiring TUI’s remaining stake have fallen through. But there have been talks with several US private equity companies.

“Our discussions with potential investors are very difficult as there have been different interests … TUI wants to sell and some investors presented their ideas, but unfortunately it was not possible to realize a deal.”

TUI likely will exit Hapag-Llloyd through a private deal rather than an IPO, Gernandt said. TUI says it has three options for its stake: a trade sale, share floatation or exercising a put option to sell it to the Albert Ballin consortium in January 2012.

Hapag-Llody scrapped plans for an initial public offering in 2004, saying it coudn't get "fair value" for Germany's biggest container shipping line.

Hapag-Lloyd plans to sell stock

Hapag-Lloyd has contacted some investment banks, with the idea to do an IPO (Initial Public Offering) to sell stock.

At the moment it is owned by TUI (which is involved primarily in group travel), and after the financial problems last year, Klaus-Michael Kuehne, the principal of Kuehne & Nagel, took a major financial stake in Hapag-Lloyd, as part of an investor group.

From The Journal of Commerce

TUI has repeatedly said it wants to dispose of its stake in Hapag-Lloyd to focus on tourism. The company, based in Hanover, Germany, hasn’t been able to find a buyer. The increase of its stake is the result of the conversion of a hybrid loan for Hapag-Lloyd into equity, according to the company’s statement in September.

A spokesman for TUI didn’t immediately respond to a phone call seeking comment.

A Hamburg-based investor group, including German billionaire Klaus Michael Keuhne, M.M. Warburg, HSH Nordbank and Hamburg’s state government, bought a majority stake in Hapag-Lloyd.

click here for link to article

TUI Travel pays back loans early to TUI parent

TUI will need cash to shore up Hapag-Lloyd, despite the expected bail out from the government.

Apparently, they will get some of this cash quite soon from their other company, TUI Travel.

From Bloomberg News

Sept. 29 (Bloomberg) -- TUI Travel Plc, Europe’s largest tour operator, said it plans to sell 300 million pounds ($477 million) of convertible bonds to start repayment of a loan from controlling shareholder TUI AG and fund acquisitions.

The U.K. holiday company also obtained a new 140 million- pound loan facility from a syndicate of five banks and will repay 92 million pounds of the 900 million pounds it owes TUI tomorrow, Crawley, England-based TUI Travel said today.
.........................
“These actions remove the immediate refinancing risk, but they crystallize an increased financing cost and we will need to adjust forecasts to reflect this,” Evolution analyst Ivor Jones wrote in a note today. He has a “sell” rating on the stock.

TUI Travel fell less than 1 percent in London trading, while shares of parent company TUI gained as much as 8.5 percent in Frankfurt. TUI, which owns a 51 percent stake in the tour operator, needs funding to support the unprofitable Hapag-Lloyd container line, in which it holds the biggest stake.

One smart move on the part of TUI Travel is to cancel orders for new planes.

The tour operator said today it has canceled 10 of the 23 787 Dreamliner aircraft ordered from Boeing Co., while adding no-obligation purchase rights to buy a further 13 of the planes.

Container carriers need to be doing this. They just keep thinking by the time the new ships come out of the yard, business will have picked up.
They need to just keep their old ships running, and maybe try to negotiate a similar no-obligation purchase with shipyards.

I realize this is a new idea for shipyards. Boeing has been through the ups and downs many times, so by now they know how to handle these drops.

Shipyards will need to learn how to handle the downturn. Most of the ones around today haven't been through such lean years.

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

click here for link

Hapag-Lloyd could be a money pit

When I read the headline that a major shareholder of Hapag-Lloyd was balking at putting in more cash, my first thought was, Mr. Kuehne.

Turns out, it is TUI who is having second thoughts about pouring more cash into Hapag-Lloyd.

From The Journal of Commerce (click here for link)

....But tourism giant TUI, Hapag-Lloyd’s former parent and still one of its biggest shareholders with a 43 percent stake, is reluctant to provide its $450 million contribution in cash. Instead, it wants to convert some of its $1.4 billion of loans to Hapag-Lloyd into an increased equity stake, according to a source close to the negotiations.
............
TUI, like most shareholders, is reluctant to put money into companies while “cash is king” in current market conditions, a source close to the Hanover-based company said.

Hapag-Lloyd is saved, for now

From the Journal of Commerce

Hapag-Lloyd, the world’s fifth largest container carrier, will get approximately $1 billion in financial support from its owners as it seeks additional aid from the German government and lenders.

click here for complete article

There are a lot of numbers thrown around. A mention of $2.4 Billion. Probably everyone is scratching their head and writing down numbers on napkins.

Who really knows.

But in my opinion, this is throwing good money after bad, or, as they say in the oil patch, pouring money down a dry hole.

Anyway, I would say Hapag-Lloyd is in a whole heap of trouble.

Infighting at TUI - will this affect Hapag-Lloyd?

There is some infighting between a large shareholder of TUI and the current management. Not only is there a move to oust the current Chairman, there is also a request for investigation regarding information reported during the sale of Hapag-Lloyd.

I don't know is this will affect Hapag-Lloyd, although TUI still owns 43% of Hapag-Lloyd, so I suspect it could.

Probably after an upturn in the market, in a couple of years, TUI will sell off their remaining stake in Hapag-Lloyd.

From Bloomberg

May 4 (Bloomberg) -- TUI AG dissident investor John Fredriksen called on fellow shareholders to support him as he seeks to oust Chairman Juergen Krumnow at the annual general meeting of Europe’s largest tour operator.

He also called on shareholders to vote in favor of a special investigation into the appropriate publication of insider information during the sale of TUI’s Hapag-Lloyd shipping line, according to today’s statement.

The honeymoon is over at Hapag-Lloyd

Back in Feb. 2009 this is what I said about the sale of Hapag-Lloyd

The parent company TUI is bound and determined to get rid of Hapag-Lloyd, even if they have to pull off a shot-gun wedding.

Well, it appears the honeymoon was short lived, which would be expected given the nature of this marriage.

THE new majority owner of German container line Hapag-Lloyd, the Albert Ballin consortium, has entered into a massive internal row over the purchase price and the extent of cuts necessary to survive the financial crisis.

The argument is being fought out in public interviews and statements.

Klaus-Michael Kühne, the second largest shareholder of Albert Ballin, openly criticised the other members for not having reacted to his call for cuts at Hapag-Lloyd. Mr Kühne said that the purchase price for Hapag-Lloyd had been too high and that chances to renegotiate a lower price with Tui had not been taken up.

click here for Lloyds List article

TUI determined to sell Hapag-Lloyd

On Jan. 15, 2009 I made a post stating the sale of Hapag-Lloyd was in jeopardy.

The parent company TUI is bound and determined to get rid of Hapag-Lloyd, even if they have to pull off a shot-gun wedding.

TUI likely will acquire a bigger stake in Hapag-Lloyd than it originally planned in order to finalize the sale of the world’s fifth-largest ocean carrier.

The German tourism group bought back a 33.3 percent stake in Hapag-Lloyd after agreeing to sell the carrier to the Hamburg-based Albert Ballin investor group for 4.45 billion euros ($5.7 billion) in October.

TUI spokesman, said the price would not be renegotiated.

TUI continues to talk with the Albert Ballin consortium about the size and conditions of a loan it has offered to Hapag-Lloyd after the sale to ensure the carrier’s liquidity during the downturn in the container market. After the deal closes, Hapag-Lloyd will hold loans totaling around 2 billion euros ($2.6 billion), including 1.3 billion euros transferred from TUI.

TUI is prepared to lend Hapag-Lloyd an additional 1billion euros, according to reports in Germany.

Despite the latest hitches, TUI said it is confident the deal will close before the release of its full-year earnings on March 25.

click here for complete article in Journal of Commerce

Hapag Lloyd sale in jeopardy

Lloyd's List reports the sale of Hapag-Lloyd has hit some problems. This is not unexpected as the sale was renegotiated just prior to the major downturn in international shipping. The only other bidder, NOL (APL) already saw this, and withdrew their bid.

The Hamburg-based Albert Ballin consortium, which bought Hapag-Lloyd, is seeking to renegotiate the terms of sale. At the same time, one of the banks supporting the action, Royal Bank of Scotland, is understood to be in the process of pulling out of the deal.

“The transaction changed and it no longer suited RBS to participate,” a source close to the deal told Lloyd’s List.

The container line was granted a $750 loan from an international banking consortium led by German banks HSH Nordbank and Hypovereinsbank to buy 29 container vessels from Tui, the parent of Hapag-Lloyd.

Hapag-Lloyd was valued at €4.5bn under the deal, including debt and the acquisition price for the vessels. Industry observers regarded the price as extraordinarily high, given the fact that the industry is in a major crisis.

Albert Ballin shareholders are due to €1.4bn as part of the transaction. Tui will continue to be a shareholder, with a stake of €700m. In addition, €2.4bn of debt was transferred to Hapag-Lloyd.

Hapag-Lloyd will be sold

The parent company of Hapag-Lloyd, TUI, held a special meeting on Sunday to discuss the future of Hapag-Lloyd. NOL had withdrawn from the bidding, so the only offer left was from the group of Hamburg investors.

They accepted this offer, but with a twist that TUI will now be one-third owner in the new company.

I suspect TUI was anxious to get Hapag-Lloyd off their books, as the next few years will be rather dismal for the shipping industry. However, there could also be some good buying opportunities during the downturn, which this new consortium might want to take advantage of.

Updated 10/10 - Will Hapag-Lloyd be sold anytime soon?

Updated Oct. 10

NOL (Neptune Orient Line)/APL announces they no longer want to buy Hapag-Lloyd


In my blog of Sept. 30, I stated that the owner of Hapag-Lloyd probably had wished they sold it last summer.

Appears John Fredricksen,a major shareholder of TUI (the parent company) had these exact thoughts.

He reportedly told Die Welt, a German publication, that he doubts a good price will be fetched for Hapag-Lloyd in the current economic environment.

click here for more from American Shipper.