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For many of the borrowers, it has become a question of survival, and the subject of profits hardly comes up at all anymore. Depending on the type of ship, charter rates are up to 80 percent lower than before the crisis, when they were at their highest point. In fact, writes Hamburg shipbroker Harper Petersen & Co., charter rates have arrived at "a painfully low level, and most shipowners are still losing money." For lack of contracts, almost 500 ships are currently at anchor in ports worldwide.
In the boom years, intoxicated with their success, German shipowners ordered $60 billion worth of new ships. Banks were expected to provide 70 percent of the financing, while shipowners planned to drum up the rest of the money from German small investors through so-called "ship funds" set up by brokerage firms like HCI, MPC and Lloyd. But now investors are balking. The supposedly safe ship funds, which had promised high returns subject to minimal tax rates, are suddenly requiring additional investments to cover their losses.
With the first funds already capitulating, shipowners can no longer depend on selling shares in new ship funds to finance their current orders.
Although brokerage firms and shipowners guarantee the equity shortfall for which the banks are now providing interim financing, they are unable to come up with the cash. "In theory, many are bankrupt," says Hamburg industry expert Jürgen Dobert. "But the banks are deferring debt service and are not enforcing their claims because they know that an entire house of cards could collapse if they did."
In the worst case, shipowners would have to sell ships from their fleets. "This would lead to new market distortions that would affect shipowners, shipyards and banks," one banker warns. Fire sales would depress already low ship prices even further, thereby reducing the value of the banks' collateral.
As recently as 2008, container ships were transporting record amounts of products across the world's oceans. Now, many German shipping companies are struggling to pay for the vessels they ordered during the boom. Their banks could be in trouble, too.
Major shipowner Bernd Kortüm and his wife were enjoying fresh snow in the Austrian ski resort of Lech last week. "The crisis is almost over," Kortüm, one of Hamburg's richest residents, said calmly, noting that things are beginning to look up for his industry. But the owner of a fleet of 102 container ships was exaggerating mightily.
Less than a year ago, Kortüm and his company, Norddeutsche Vermögen, were on the brink of collapse. Hamburg-based commercial lender HSH Nordbank had previously set aside risk reserves of close to €250 million ($338 million) to cover a credit line in the billions. "Because of the inadequate economic circumstances," the auditors of KPGM wrote, there were "acute risks of default." The lender was even threatening an extraordinary termination of loan agreements.
http://www.spiegel.de/international/bus ... 07,00.html
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