Lawmakers say “not so fast” on Hapag-Lloyd aid

Lawmakers say “not so fast” on Hapag-Lloyd aid

Lawmakers say “not so fast” on Hapag-Lloyd aid

   Troubled German ocean carrier Hapag-Lloyd was thrown a curve Wednesday when members of Germany's parliament budget committee delayed a $1.8 billion package of loan guarantees due to concerns over what the loans entailed.
   The delay came as a surprise, as the aid package was expected to pass fairly smoothly after Germany's Economy Ministry announced earlier this week that it had approved the deal.
   Hapag-Lloyd is seeking government aid to weather a particularly difficult year in which freight rates and volume have plummeted on key trades. The aid was one component of a deal to help the carrier rebound and survive the current downturn. Shareholders have agreed to $2.7 billion in aid of their own for Hapag-Lloyd to ease near-term liquidity concerns, with the government aid acting contingent on shareholders taking the primary investment risk. The amount the shareholders have committed to providing, if necessary, more than double what was first proposed when the carrier requested state aid in August.
   Despite the shareholder proposals, concerns about the aid persisted in Germany's parliament, with some lawmakers calling the bid 'opaque,' according to a Bloomberg report.
   The petition for aid 'raises serious questions on where taxpayers' money will be spent, and we need answers quick,' said Juergen Koppelin, the Free Democrats' budget spokesman, according to the Bloomberg report. 'Hapag has commissioned ships to be built in South Korea, there are plans to construct new buildings, and the list goes on.'
   According to maritime news service Alphaliner, Hapag-Lloyd is the world's seventh-biggest ocean carrier in terms of fleet capacity, and has 14 ships on order, representing 26.4 percent of the carrier's current fleet capacity.
   Hapag-Lloyd lost $618 million in the first half of 2009.
   The budget committee, according to press reports in Germany, gave the economy ministry 24 hours to clear up confusion over the loan guarantees, so that lawmakers could be sure taxpayers money wouldn't be spent. The committee can’t outright prevent the aid from being granted, but the government is expected to respond to any concerns the committee has.