TUI, the former owner of Hapag-Lloyd and current 43 percent shareholder, said earlier Thursday that it expected an application for a $1.7 billion credit facility from the government would be filed soon. But the application would be contingent on shareholders agreeing to a financial aid package of their own, amounting to slightly more than $1 billion.
The line needs the $2.7 billion to ensure it weathers the down cycle in the economy, TUI Chief Financial Officer Rainer Feuerhake said in an earnings call Thursday. An appraisal of the container line, necessary for the government aid application, indicated Hapag-Lloyd has positive long-term prospects, and that its current struggles are due to the historic economic downturn and not structural problems within the business, he said.
Hapag-Lloyd expects to cull $580 million in costs this year, with $200 million saved in the first half.
In a statement released after first half earnings came out, TUI, on behalf of Hapag-Lloyd's shareholders, said: 'The shareholders of Hapag-Lloyd AG today agreed on what their long-term contribution would be for supporting and consolidating the shipping company. It is intended to have a cash capital increase funded proportionally by the shareholders as well as to convert existing credit lines into equity and/or hybrid funding structures. The agreement is subject to approval by the respective supervisory bodies. The shareholders assume that with the agreement reached today an application for a government guarantee could be submitted immediately.'
The agreement essentially means shareholders have committed to provide roughly $600 million more to Hapag-Lloyd, after spending $470 million to buy a Hamburg container terminal from the carrier. The $470 million is expected to last through October, with the other shareholder money and state aid expected to come by September. ' Eric Johnson
