KG shipowners rethink bailout request

Two of the German KG funds have decided against asking for government monies. For now.

It's estimated that KG Funds in Germany control 1/3 of the world's containerships, and 60-70% of the orders for newbuildings.

I don't think the withdrawal of the request is because they couldn't use the money, but rather, they don't think the timing is right. If they don't get money from somewhere, I don't see how they can arrange deliveries of the newbuildings.

Maybe the shipyards will start financing the sales.

From The Journal of Commerce

Two German container shipowners that had previously requested aid from the German state have withdrawn their applications, the Financial Times reported Tuesday.

Jochen Dohle, president of Peter Dohle Schiffahrt, told the Financial Times it had withdrawn its application last week. Another owner, Claus-Peter Offen, had previously announced it no longer planned to rely on state support.
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Dohle told the Financial Times it had withdrawn its application after receiving “numerous questions” from officials scrutinizing the request. Dohle confirmed on Oct. 22 that it was seeking help from the German government’s Deutschlandsfonds, for companies hit by the economic crisis, to finance its orders for new ships.

“We’ve simply said: ‘We leave it and we wait until the overall political situation can clarify whether help for shipping is granted or not,’” Dohle said.

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Is CMA CGM looking for a bailout?

Could be.

From The Journal of Commerce

French ocean carrier CMA CGM is meeting with creditor banks and French finance ministry officials in Paris Sept. 25 to discuss its financial situation.

The talks will focus on how CMA CGM can tap the government’s strategic investment fund which aims to help strategically important French companies through the global economic downturn, according to French press reports.

CMA CGM, the world’s third largest ocean carrier, declined to confirm or deny the reports.

I don't blame them for trying to tap some of the government monies. They will need to raise some cash to survive the next few years, so why not try to get it from the government?

Of course, they really need to be cutting costs and getting efficient, so they can compete with all the asian carriers, who will dominate the industry over the next decade.

But, looks as if they are trying to hold the "Old Europe" together.

Earlier this month, CMA CGM founder and Chairman Jacques Saade urged European governments and banks to act to ensure Europe’s top carriers Maersk, MSC and CMA CGM survive container shipping’s deepest slump.

“I call on the competent authorities, banks and public bodies to protect the three big European maritime companies and ensure the survival of the maritime sector in Europe,” Saade said at a meeting of Medef, the French employers’ federation.

The French ship-owners association has lobbied the government to establish a $1.8 billion fund to help carriers meet banks’ demands for extra collateral to cover the fall in value of ships on order.

What they need to do is bite the bullet, and just cancel the orders for new ships.

Update- Hapag-Lloyd Berlin bail-out

From Reuters (click here for link)

TUI and the Albert Ballin consortium, which owns 57 percent of Hapag-Lloyd and includes Swiss-based German billionaire Klaus-Michael Kuehne and the city of Hamburg, appear to have overcome their differences despite mutinous murmurings from Kuehne earlier in the process.

They have agreed to convert existing credit lines into equity or hybrid loans while unwinding an earlier deal to sell Hapag-Lloyd’s 25 percent stake in Hamburg’s Altenwerder container terminal. This should pave the way for the German government to make the loan guarantees available.

Kuehne — who owns 55.8 percent of Swiss logistics firm Kuehne & Nagel — has bigger plans for Hapag-Lloyd, pushing the idea of a tie-up between Germany’s largest container shipping company and a European or Asian peer.

Kuehne’s instincts are probably right in the longer term. He clearly knows the business and how to run a successful logistics company. But it was necessary to paper over the differences between shareholders in order to keep the German government onside.

Zim fights back

The Israel Securities Authority yesterday disallowed a vote by a minority shareholder, and today Zim has contacted an attorney to try and get something done to change this.

They desperately need money to avoid bankruptcy.

From Lloyd's List

In a statement released today, Zim said: “It is important to note that Israel Corp’s position differs from the Israel Securities Authority, it believes that the required majority has in fact been achieved and the Board is therefore presently seeking legal council to consider its options.”

The statement goes on to say, “if the controlling shareholders and Bank Leumi votes had been counted, over 90% of the votes would be in favor of the fund injection.”

Zim chief executive Rafi Danieli said: “With the support of Israel Corp, ZIM is continuing with its efforts to formulate a long-term, comprehensive financial restructuring plan for the company.”

Sources in Israel said that a legal dispute with regulators would not typically end up in the court system, but would be solved through direct negotiations. However, analysts noted that Zim’s survival is at risk if the dispute persists.
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Virtually no one believes that Zim can survive without infusion from its parent company. Zim employs over 7,000 people and is considered by some to be the national symbol of Israeli shipping.

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Update-Zim funding blocked

From Lloyd's List

Zim rocked as $100m rescue funding plan hits buffers

Tom Leander - Tuesday 25 August 2009
A VOTE on $100m in rescue funding for troubled Israeli container line Zim Integrated Shipping Services was rejected by the Israel Securities Authority on the grounds that Bank Leumi, which was in favour of the funding, was not eligible to vote.

The Israeli securities authority said there were not enough remaining minority shareholders to pass the vote.

Bank Leumi is a key minority shareholder in Zim’s owner, Israel Corp.

Zim could not be reached for comment at press time.

The drama affecting Zim has dragged on for five days since the Israel SEC ruled previously that the bank was not eligible to vote for bailout package because of its position as a lender to Zim.

The bank is the largest minority shareholder of Israel Corp, holding 18% of the stock, and has loans of $10m outstanding to the container line.
But the bank voted anyway, leading to a debate by remaining minority holders over who would be allowed to decide the vote. A full 54.2% of Israel Corp is owned by vehicles owned by the Ofer family.

The capital injection was part of a broader plan to pump $350m into Zim, a victim of the global downturn in the container market. At least one-third of minority voters are required to vote in favour for the $100m to be released.

Analysts have repeatedly expressed frustration over the lack of information offered by Israel Corp over the Zim restructuring plan, which was announced on August 2.

“I don’t think [Israel Corp] can stick with this situation — not saying anything — for much longer,” said Yoav Burgan, an analyst with Leader, an investment house in Tel Aviv. “It doesn’t make sense.”

At the time, Israel Corp announced a deal that would allow deferrals on ships that Zim had on order and, in some cases, help with financing.

It also outlined a plan to offer convertible shares to shipowners doing business with Zim in an exchange in reduction of charter rates, but the rate of conversion for the shares was not included — making the true value of the offer hard to glean.

Update Hapag-Lloyd cash injection

Bloomberg News has an article today regarding the cash infusion into Hapag-Lloyd.
They state the German government will decide by the end of September whether to provide a bail out.
News earlier this week said by mid-Sept. So, I don't know if the targeted date has been delayed, or is someone has put in a "fudge factor".

From Bloomberg

Aug. 25 (Bloomberg) -- German shipping line Hapag-Lloyd AG may receive a 923 million-euro ($1.32 billion) cash injection from owners including the city of Hamburg as the company seeks to bolster its chances of receiving a federal loan guarantee.

The capital increase approved today by the city’s government is more than the 750 million euros that had been previously pledged by shareholders and should fulfil requirements for receiving the 1.2 billion-euro government guarantee, Hamburg’s finance department said in a statement.

Chancellor Angela Merkel’s government will decide by the end of next month whether to grant the container line the guarantee its owners say is needed to boost liquidity as the global economic slump hurts world trade. TUI AG, which owns 43 percent of Hamburg-based Hapag, said Aug. 13 that the company needed total financing of at least 1.95 billion euros.

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Berlin to decide by mid-Sept. on Hapag-Lloyd funding

From Lloyd's List

Berlin sets timing for Hapag-Lloyd state aid

Patrick Hagen, Berlin - Friday 21 August 2009
THE Berlin government will decide on Hapag-Lloyd’s application for state guarantees by mid-September, the country’s maritime co-ordinator Dagmar Wöhrl told journalists in Berlin today.

Hapag-Lloyd has asked the government for guarantees totalling €1.2bn ($1.7bn), covering loans provided by banks HSH Nordbank, HVB and KfW.

The request is the biggest application from any maritime company, Mrs Wöhrl said. She did not reveal further names of shipowners asking for help but at least one other German owner has already applied.

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