Singapore shipping company Neptune seeks $5 loan to buy German firm
23 Jun 2008
According to latest reports, the world's eighth container shipping firm Neptune Orient Lines Ltd. (NOL), is seeking to borrow at least $5 billion for a potential bid to buy German tourism group TUI AG's sea-cargo unit Hapag-Lloyd, the latter being valued at approximately $7- 8 billion and the fifth-largest in the world by carrying capacity.
Talks for a loan come as TUI CEO Michael Frenzel tours Asia to market Hapag-Lloyd, which the German group has put up for sale and NOL is considered a likely bidder. Among the other interested parties that Frenzel is scheduled to meet are Hong Kong-based Orient Overseas and Toyo-based Nippon Yusen.
NOL, which is two-thirds owned by the Singapore sovereign wealth fund Temasek Holdings Pte, is reportedly in talks with three local banks DBS Group, Oversea-Chinese Banking Corp and United Overseas Bank, as well as with some foreign players for the loan. NOL's container shipping line operates under the name APL, which earlier stood for American President Lines.
Neptune will also be competing with Alecta, a Swedish pension fund, M.M. Warburg & Co., the German city-state of Hamburg and billionaire Klaus-Michael Kuehne for the acquisition. Hamburg's government said in April that the port city might consider buying the shipping line to protect jobs.
A tie-up between NOL and Hapag- Lloyd will create a container shipping behemoth, with the capacity to carry more than 880,000 twenty-foot equivalent (TEU) boxes. The combination of the current No.5 and No.8 in the business will be No.3 in the new rankings, just behind Maersk Line, the shipping division of AP Moeller-Maersk A/S, and Mediterranean Shipping Co.
TUI is forecasting an almost 70 per cent increase in 2008 earnings at Hapag-Lloyd. Its adjusted full-year earnings before interest, taxes, depreciation and amortization are expected to reach $788 million, as revenue climbs 20 per cent to $9.7 billion. For 2010, Hapag-Lloyd's adjusted EBITDA is expected to rise to $1.3 billion on sales of $11.7 billion.
| Top 10 container shipping companies in order of TEU capacity, first January 2006 | |||
| Company | TEU capacity | Market Share | Number of ships |
| AP Moeller-Maersk Group | 1,665,272 | 18.2 per cent | 549 |
| Mediterranean Shipping Company S.A. | 1,250,000 | 11.7 per cent | 376 |
| CMA CGM | 507,954 | 5.6 per cent | 256 |
| Evergreen Marine Corporation | 477,911 | 5.2 per cent | 153 |
| Hapag-Lloyd | 412,344 | 4.5 per cent | 140 |
| China Shipping Container Lines | 346,493 | 3.8 per cent | 111 |
| Hanjin-Senator | 331,437 | 3.6 per cent | 145 |
| APL | 328,794 | 3.6 per cent | 99 |
| COSCO | 322,326 | 3.5 per cent | 118 |
| NYK Line | 302,213 | 3.3 per cent | 105 |