Hapag-Lloyd Boosts Bond Issue

Hapag-Lloyd Boosts Bond Issue

Hapag-Lloyd plans to raise an additional $210 million from private investors as a part of a refinancing following strong demand for the German ocean container carrier's $700 million bond issue in early October.

This is the second time the Hamburg-based carrier has increased the size of its bond -- the $700 million issue was $200 million more than originally planned -- as investor appetite has been whetted by its rapid financial recovery from the container shipping slump.

Hapag-Lloyd will use the proceeds from the increased high yield bond to pay off a $300 million loan to its largest shareholder, TUI, related to the sale of a minority stake in a Hamburg container terminal, by the end of the year.

The world's sixth largest carrier, according to the JOC list of Top 15 Container Fleet Operators, cancelled a $1.6 billion government loan guarantee in September, to allow it to start repaying interest to its debt holders, principally TUI, Europe's biggest travel and tourism group.

TUI owns 43.3 percent of Hapag-Lloyd, with the rest held by the Albert Ballin consortium.

The refinancing, which also included a $360 million syndicated credit line, increases Hapag-Lloyd's independence from TUI, paving the way for the tourism group to eventually quit container shipping.

Hapag-Lloyd is due to pay $91 million of deferred interest on loans to TUI in October and a $304 million bridge loan at the beginning of November.

TUI will convert a $470 million hybrid loan into Hapag-Lloyd shares by the end of the year, increasing its stake to 49.8 percent.

Hapag-Lloyd lost around $1 billion in 2009 but swung to a record operating profit of $294 million in the second quarter from a year-earlier loss of $250 million.

-- Contact Bruce Barnard at brucebarnard47@hotmail.com.