Hapag-Lloyd owners ready to extend lifeline-sources
The owners of Hapag-Lloyd are preparing to give the German container shipping company further financial support, several people familiar with the situation told Reuters.
Shareholder consortium Albert Ballin and German tourism group TUI AG , Hapag's former parent, are gearing up to provide it with another 420 million euros ($595 million) after giving 330 million euros in July, the sources said.
"It is still undecided whether TUI will inject further cash or transform existing loans to Hapag into equity," said a source close to TUI. The latter was the preferred option, the source said. How much each party would give has not yet been decided. Efforts to prop up the company come amid a general collapse in demand for container shipping.
Danish A.P. Moller-Maersk , a maker or large container ships, announced this week it would end building ships in Denmark.
TUI sold Hapag-Lloyd to the investor group earlier this year but the financial crisis threw a spanner in the works and Hapag fell victim to the collapse of world trade.
TUI, which also owns about 52 percent in Europe's largest travel group, London-listed TUI Travel , ended up keeping 43 percent in its former container shipping unit, more than initially planned, and also agreed to provide additional credit facilities.
Sources have told Reuters that Hapag-Lloyd could need up to 1.75 billion euros in total, of which the government may provide 1 billion. The Financial Times Deutschland, without citing sources, reported that Hapag-Lloyd may need up to 1.95 billion euros in financial support through 2011.
The Hapag-Lloyd supervisory board is due to meet on Tuesday and may decide on an application for state aid.
TUI shares were down 2.9 percent at 4.885 euros by 1054 GMT.
Traders also cited a report in German financial daily Handelsblatt, which raised concern that TUI may struggle to service its debt load, which stood to 2.6 billion euros in May.
TUI Travel shares were flat in London.
Five-year credit default swaps on TUI AG were about 0.5 percentage points wider at 30.75 percent upfront. The 625 million euro bond maturing in May 2011 DE019179478= was bid 2 cents lower at 88.5 percent of face value. ($1 = 0.7059 euro)
Shareholder consortium Albert Ballin and German tourism group TUI AG , Hapag's former parent, are gearing up to provide it with another 420 million euros ($595 million) after giving 330 million euros in July, the sources said.
"It is still undecided whether TUI will inject further cash or transform existing loans to Hapag into equity," said a source close to TUI. The latter was the preferred option, the source said. How much each party would give has not yet been decided. Efforts to prop up the company come amid a general collapse in demand for container shipping.
Danish A.P. Moller-Maersk , a maker or large container ships, announced this week it would end building ships in Denmark.
TUI sold Hapag-Lloyd to the investor group earlier this year but the financial crisis threw a spanner in the works and Hapag fell victim to the collapse of world trade.
TUI, which also owns about 52 percent in Europe's largest travel group, London-listed TUI Travel , ended up keeping 43 percent in its former container shipping unit, more than initially planned, and also agreed to provide additional credit facilities.
Sources have told Reuters that Hapag-Lloyd could need up to 1.75 billion euros in total, of which the government may provide 1 billion. The Financial Times Deutschland, without citing sources, reported that Hapag-Lloyd may need up to 1.95 billion euros in financial support through 2011.
The Hapag-Lloyd supervisory board is due to meet on Tuesday and may decide on an application for state aid.
TUI shares were down 2.9 percent at 4.885 euros by 1054 GMT.
Traders also cited a report in German financial daily Handelsblatt, which raised concern that TUI may struggle to service its debt load, which stood to 2.6 billion euros in May.
TUI Travel shares were flat in London.
Five-year credit default swaps on TUI AG were about 0.5 percentage points wider at 30.75 percent upfront. The 625 million euro bond maturing in May 2011 DE019179478= was bid 2 cents lower at 88.5 percent of face value. ($1 = 0.7059 euro)
