Hapag drops state loan guarantees, offers US$500 million bond

GERMAN travel giant TUI, which owns 43.3 per cent of Hapag Lloyd, has announced that it will go ahead with a refinancing plan, which involves giving back the container line's unused state loan guarantee, reports Dow Jones.

The decision will allow container line to secure new funding and pay down debts, with a bond issue to raise US$500 million to repay its major creditor TUI, and allowing its big lender-shareholder a chance to raise its own stake in the company to 49.8 per cent.

Already Hapag-Lloyd has commenced marketing its high-yield debt issue, made up of five- and seven-year bonds dominated in euros and dollars, reported Lloyd's List. The German container line, which has moved up from fifth to third place in world container line league tables, also seeks a revolving credit facility which will allow it to repay debt, which encompasses more than EUR1.3 billion (US$1.7 billion), including a bridging loan due January 1, 2014 as well as three other loans.

Of the other hybrid loans, one is for EUR350 million, which can be sold on by TUI. Another EUR350 million will be converted into equity with effect from December 31.

"The Albert Ballin consortium [another big shareholder] has a call option for the new shares until September 30, 2011," TUI said in a statement. "Regardless of this call option, TUI remains entitled to sell all of its shares in Hapag-Lloyd to a third party at any time; the Albert Ballin consortium hold pre-emption rights."
(Source:www.schednet.com)