German Lawmakers OK Hapag-Lloyd Loan Guarantees

Germany's parliament cleared the way for Hapag-Lloyd to receive federal and local government loan guarantees worth $1.8 billion to help the container line survive the downturn in global trade.

The Bundestag’s budget committee approved a paper that takes note of Chancellor Angela Merkel’s plan to fund guarantees, while suggesting the government impose conditions on Hapag- Lloyd’s owners, Wolfgang Hinz, a staff member of the Berlin- based committee, told Bloomberg News.

“The committee isn’t blocking the aid,” Hinz said. Government and opposition parties joined in the decision, he said. A government panel led by the Economy Ministry may consider Hapag-Lloyd’s bid as early as today, ministry spokesman Felix Probst said.

Committee members raised questions yesterday about how Hamburg-based Hapag-Lloyd and TUI AG, the German tour operator that holds a 43 percent stake in the shipper, will use the aid. Lawmakers suggested the government tie aid to demands such as a cap on executive pay and a dividend ban, according to the paper.

Merkel’s government has agreed to share 90 percent of the guarantee costs with the Hamburg state government.

Hapag-Lloyd’s owners, which also include the city, will provide $2.7 billion as part of a rescue package of cash injections, loans and loan guarantees, government officials said Sept. 29.

The German container line expects to post a loss of about $1.3 billion this year and as much as $730 million in 2010, Frankfurter Allgemeine Zeitung reported on Sept. 16, without saying where it got the information.