Talks stall as TUI demands equity for its Hapag bailout money

TROUBLED German container carrier Hapag Lloyd is not receiving its promised US$450 million in aid from former owner TUI AG until the travel industry giant gets more equity than the 43 per cent it holds, reports Newark's Journal of Commerce.

Major shareholders recently agreed to splitting a US$1 billion aid package, but its second biggest shareholder, TUI, wants the $1.4 billion it lent to the world's fifth largest container carrier converted into equity before contributing its promised share, according to a source close to the negotiations.

But this has been rejected by the Hamburg-based Albert Ballin group, which owns 57 per cent, on grounds that it would deny cash the carrier needs. Other shareholders, members of the Albert Ballin group, are reportedly unwilling or unable to provide more cash either.

But TUI is said to be willing to compromise as it fears for the future of Hapag-Lloyd, but it would not comment on reports on its alleged demand to convert its loans to equity before providing fresh cash.

All a TUI spokesman would say was: "We are in constructive talks" with the Albert Ballin consortium.

TUI sold Hapag-Lloyd to the Albert Ballin group for $6 billion, but retained a 43 per cent - 10 per cent more than it wanted in order to close sale. It also lent Hapag Lloyd's new management $1.4 billion. Today, the carrier also seeks $1.4 billion in state loan guarantees.

(Source: www.schednet.com)