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Hapag-Lloyd raises US$414m from capital increase to reduce debts

GERMAN-BASED Hapag-Lloyd has raised US$414 million through a capital increase agreed after its merger with United Arab Shipping Co (UASC) with most of its shareholders exercising their rights to buy up 11.7 million new shares.

The capital increase was supported by primary shareholders CSAV Germany Container Holding, Kuehne Maritime, Qatar Holding Germany, and The Public Investment Fund of the Kingdom of Saudi Arabia for a total of EUR352 million, IHS Media reported.



In a statement, the Hamburg-based carrier said 96.5 per cent of the existing shareholders exercised their subscription rights, increasing the company's share capital to EUR176 million.



"We are pleased about the high level of demand for our shares," said Rolf Habben Jansen, CEO of Hapag-Lloyd. "We see this as an encouragement to continue to rigorously pursue our strategic and operative objectives."



Hapag-Lloyd will use the proceeds primarily for the repayment of debts and to strengthen its capital structure, reducing the leverage of the company. Its financial debt as at June 31 stood at $7.312 billion, against shareholders equity of $5.9 billion, according to Alphaliner.



Reducing debt has been a key focus of the container shipping industry that is enjoying a return to profitability that has been absent for several years. There is an understanding that although a sudden drop in freight rates can instantly wipe out recently acquired profit, cutting down recurring expenses is a more sustained way to take costs off the bottom line.



However, while some carriers address debt levels, others are ordering new and larger vessels, most notably MSC in the 2M Alliance and CMA CGM in the Ocean Alliance. MSC recently ordered 11 vessels of 22,000 TEU and CMA CGM placed an order for 9 of the megaships.



Maersk Group will also be cutting down debt with the $1.17 billion proceeds the Danish shipping giant will earn from the sale of Maersk Tankers. Alphaliner said analysts estimate the group could get up to $6 billion for its two remaining energy business units, Maersk Drilling and Maersk Supply Service, that it plans to sell by 2018.
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