Taiwan's Yang Ming seeks bailout, suspends trading after huge losses
TAIWAN's Yang Ming shipping line suspended stock trading on Friday to seek financing to cover huge losses that are completely disproportionate to the size of the company.
After years of losses, Taiwanese container shipping line said it was seeking government and private investment in a bid to recapitalise after losing more than US$650 million in less than two years.
Singapore-based Drewry analysts Nilesh Tiwary and Rahul Kapoor told Lloyd's Loading List that Yang Ming's stock trading suspension was unlikely to repeat last year's Hanjin Shipping bankruptcy.
"We do not think this will have any knock-on effects in terms of services," they said. "Also, on the eve of the new alliances' network kick-off on 1 April, members of The Alliance - Hapag-Lloyd, K Line, MOL, NYK and Yang Ming - announced that they will create an independent trust fund to safeguard cargo in the event of any member lines going the same way as Hanjin.
"We do not think counter parties should be worried at this stage as we expect the Taiwanese government to intervene and bail out Yang Ming," they said.
Yang Ming said little, the company lost $492 million in 2016, a result Lars Jensen, chief executive and partner at SeaIntelligence Consulting, described as "very negative".
Earlier this month Yang Ming said it had raised $54.4 million in an offer of 161.33 million new shares to six investors, both government institutions and private companies, reported London's Loadstar.
They are the National Development Fund of the Taiwan Government, Taiwan Navigation Co, Taiwan Chinachem, T3ex Global Holdings, Mercuries Life Insurance, and Superstar Investment.
The National Development Fund said will hold a 6.39 per cent stake in Yang Ming, and the company said it anticipates it will continue to invest in Yang Ming in subsequent rounds.
Yang Ming said Taiwan's government, including the Ministry of Transport and Communications, now owns 36.62 per cent of the company.