German shipping line Hapag-Lloyd AG may receive a 923 million-euro ($1.32 billion) cash injection from owners including the city of Hamburg as the company seeks to bolster its chances of receiving a federal loan guarantee.

The capital increase approved today by the city’s government is more
than the 750 million euros that had been previously pledged by
shareholders and should fulfil requirements for receiving the 1.2
billion-euro government guarantee, Hamburg’s finance department said in
a statement.

Chancellor Angela Merkel’s government will decide by the end of next
month whether to grant the container line the guarantee its owners say
is needed to boost liquidity as the global economic slump hurts world
trade. TUI AG, which owns 43 percent of Hamburg-based Hapag, said Aug.
13 that the company needed total financing of at least 1.95 billion
euros.

“The city government today agreed further contributions to stabilize
Hapag-Lloyd,” Hamburg’s statement said. “The city and other owners see
the conditions fulfilled for the loan guarantee.”

The company’s other shareholders include German billionaire Klaus
Michael Kuehne and lender M.M. Warburg. The cash injection still needs
the approval of the Hamburg’s parliament, or Buergerschaft, and of
European Union regulators.

German maritime companies including Hapag, ThyssenKrupp Marine Systems
and Wadan Yards MTW GmbH are suffering as collapsing world trade crimps
demand for shipping. The global container market will decline more than
10 percent this year, according to a June forecast from London-based
Drewry Shipping Consultants Ltd.

Germany, the world’s biggest exporter, has been particularly hurt and
the government says it will help provided that companies had a working
business model prior to the slump.

Hapag had a first half loss of 435 million euros before interest, tax and appreciation as sales fell 24 percent.

Source: Bloomberg

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