FRANKFURT, April 1 Ailing German public-sector lender HSH has cut its exposure to bad shipping loans by striking a debt restructuring deal involving the merger of debtor Ahrenkiel and two of its shipping peers.
HSH, seeking to improve its capital position ahead of European banking health tests this year, has agreed to restructure 400 million euros ($551 million) in loans made to Ahrenkiel, which will be taken over by MPC and Thien & Heyenga for an undisclosed sum.
The deal with the three Hamburg-based companies is the continuation of HSH's efforts to reduce its large exposure to a sector that has been hit by the weak global economy and an oversupply of vessels, pushing dozens of shipping companies into default or restructuring.
"The market is difficult for all three of us," said Constantin Baack, managing director of the newly founded Ahrenkiel Steamship, referring to Ahrenkiel, MPC and Thien & Heyenga. "But by merging our operations we will save overhead costs and gain better purchasing terms."
HSH's shipping exposure, which now amounts to 8 billion euros, had prompted it to seek a state bailout in 2009, which was approved by the EU on condition that HSH reduced its ship book.
"The new shipping group has a stable financial and business foundation," MPC said in a statement after the latest deal.
HSH has lent Ahrenkiel a total 400 million euros, 275 million euros of which is to finance ships, two people familiar with the transaction said.
Of the shipping loans, about 100 million euros will be refinanced by the Ahrenkiel buyers within 12 months. The remainder will be repaid by Ahrenkiel Steamship when the economic situation enables it to do so, the sources said.
Separately, Ahrenkiel has $150 million in outstanding loans from Commerzbank, NordLB, MM Warburg and Credit Suisse that were not part of the restructuring deal.
Ahrenkiel Steamship and partner shipping group Buss have a combined fleet of 139 ships under management - mainly medium-sized container ships and bulk carriers. That includes the 62 ships from Ahrenkiel, MPC and Thien & Heyenga with a capacity of 120,000 standard containers. ($1 = 0.7256 Euros)
(Reporting by Arno Schuetze; Editing by Thomas Atkins and David Goodman)