TUI AG's board approved a refinancing package for Hapag-Lloyd that will help pave the way for the German travel group's exit from the container shipping business.
As part of the agreement, Hapag-Lloyd will cancel a 1.2 billion euro ($1.6 billion) state loan guarantee it obtained to weather the global economic crisis that had pummelled demand for trade around the world, TUI said on Wednesday.
Cutting its dependency on government funding means that Hapag-Lloyd, the world's fifth-largest container shipper, will be able to resume interest payments to debt holders.
TUI, which also owns Europe's largest travel company, TUI Travel (TT.L), said it will get about 65 million euros of deferred interest next month and expects repayment of a 227 million euro bridge loan in the near future.
TUI had tried to sell Hapag-Lloyd to a group of investors -- called the Albert Ballin consortium -- but the deal was derailed by the financial crisis and TUI ended up keeping a larger-than-planned 43 percent stake in the shipper.
"We regard the refinancing as a preparation enabling TUI to sell its 43.3 percent stake in Hapag as soon as possible, if the price is OK," Merck Finck analyst Robert Greil said in a note. Sources told Reuters this month that TUI is preparing to float its stake in Hapag-Lloyd as a first step in a strategic reshuffle that will lead to combining TUI and TUI Travel.
As part of Hapag-Lloyd's refinancing plans, a 350 million euro bond will be converted into Hapag-Lloyd equity at the end of the year, raising TUI's stake to 49.8 percent.
While the Albert Ballin consortium -- which includes German entrepreneur Klaus-Michael Kuehne and the city of Hamburg -- will have a call option on the new shares until Sept. 30, 2011, TUI is entitled to sell all of its shares to someone else, too.
"TUI stays committed to maximising the value of its Hapag-Lloyd investment and to closely monitoring all options to exit the business," TUI said.
As part of the agreement, Hapag-Lloyd will cancel a 1.2 billion euro ($1.6 billion) state loan guarantee it obtained to weather the global economic crisis that had pummelled demand for trade around the world, TUI said on Wednesday.
Cutting its dependency on government funding means that Hapag-Lloyd, the world's fifth-largest container shipper, will be able to resume interest payments to debt holders.
TUI, which also owns Europe's largest travel company, TUI Travel (TT.L), said it will get about 65 million euros of deferred interest next month and expects repayment of a 227 million euro bridge loan in the near future.
TUI had tried to sell Hapag-Lloyd to a group of investors -- called the Albert Ballin consortium -- but the deal was derailed by the financial crisis and TUI ended up keeping a larger-than-planned 43 percent stake in the shipper.
"We regard the refinancing as a preparation enabling TUI to sell its 43.3 percent stake in Hapag as soon as possible, if the price is OK," Merck Finck analyst Robert Greil said in a note. Sources told Reuters this month that TUI is preparing to float its stake in Hapag-Lloyd as a first step in a strategic reshuffle that will lead to combining TUI and TUI Travel.
As part of Hapag-Lloyd's refinancing plans, a 350 million euro bond will be converted into Hapag-Lloyd equity at the end of the year, raising TUI's stake to 49.8 percent.
While the Albert Ballin consortium -- which includes German entrepreneur Klaus-Michael Kuehne and the city of Hamburg -- will have a call option on the new shares until Sept. 30, 2011, TUI is entitled to sell all of its shares to someone else, too.
"TUI stays committed to maximising the value of its Hapag-Lloyd investment and to closely monitoring all options to exit the business," TUI said.