EU сhallenges Hapag-Lloyd loan guarantees

European Union regulators are challenging the German government's $1.7 billion loan guarantees to Hapag-Lloyd, the country's biggest ocean container carrier, which narrowly avoided a loss in the fourth quarter.

The EU is concerned the guaranteed credits, which were approved by the German government in October, do not meet EU conditions on state aid, the Financial Times Deutschland reported.

The EU's executive commission does not believe Hapag-Lloyd fits into the category of aid for small companies.
The commission has been negotiating with German officials over the loan guarantees since September amid concern it might give the carrier an advantage over rival European container shipping lines.

Hapag-Lloyd has said it might not need to raise the guaranteed loans, which were part of a multi-billion dollar rescue package for the world's sixth largest ocean carrier.

Hapag-Lloyd broke even in the fourth quarter of 2009 on the back of rising freight rates and increased cargo volume, German media reported carrier officials as saying.

The carrier swung to an operating loss of $986 million in the first nine months of 2009 from a year earlier profit of $320 million as revenues slumped 29 percent to $4.8 billion from $6.7 billion.

When the third quarter figures were released in mid-December, TUI, which owns 43 percent of Hapag-Lloyd, said the losses had continued into the fourth quarter.

Source: http://www.joc.com