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Yang Ming defends its position, explains recapitalisation plan

Taiwan’s Yang Ming, the island’s second largest boxline, has moved to allay fears that its financial position makes it look like the next Hanjin.

In a note to customers yesterday, Yang Ming outlined how it has been moving to position itself on a more even keel.

The line’s recapitlisation plan follows hot on the heels of the Taiwan government’s recently announced $1.9bn shipping bailout plans.

Yang Ming’s recapitilisation move includes a stock consolidation as well as the injection of fresh capital from unspecified new investors. The first stage of this injection of capital will be from various government and private entities, including banks and financial institutions. Yang Ming will issue new stock to these investors, and with the new capital Yang Ming said it expects “immediate benefits to its balance sheets”.

“With this strong showing of government support, it is also expected to help enhance additional private sector investment in Yang Ming,” the world’s eighth largest liner said in its message to clients.

As it stands the state owns a third of Yang Ming, a percentage set to rise, the liner said.

“As we head into the new year, Yang Ming assures its customers that it will remain absolutely committed to finding solutions to stay competitive in the industry. While the predictions for 2017 appear to show some improvements for carriers, Yang Ming remains prepared to take any measure necessary to maintain its competitiveness, without sacrificing its dedication to its customers. Yang Ming will continue to take a conservative approach in its actions, but Yang Ming is fully aware of and prepared to exercise on its option to draw on the $1.9bn in government-backed funding should circumstances in the market arise requiring for such assistance,” the Keelung-based firm said, adding: “Customers and vendors can rest assured that Yang Ming is not in default of any obligations and any suggestions otherwise are patently false. As it has been repeated in early advisories, Yang Ming has never approached its creditors with any demands to restructure any part of its debt, and Yang Ming does not have any intentions to do so going forward. Yang Ming has never failed to deliver in difficult times, even in the wake of the largest carrier bankruptcy.”

The future of Yang Ming has been the source of much conjecture in recent months with a merger with fellow Taiwan liner Evergreen mooted while it has come in for heavy criticism by Drewry Financial Research Services for its massive debts. Drewry stated today that it was impressed by Yang Ming’s quick response to clients.

“We believe the company has been forthcoming and transparent and are appreciative of the company’s quick and clear response. This should likely soothe both the customers and investors’ nerves. However, we await further actions to review our stock recommendation on [Yang Ming], expecting a highly dilutive and large equity injection,” Drewry said in a note to clients.


Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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