Analysis: cut in dividend may sound a warning to APMM investors
The share price of AP Møller Maersk Group has risen by around 40% since last ...
Yang Ming today issued an update on its financial status to mitigate shipper and service provider concerns after the suspension of its shares on the Taiwan Stock Exchange last week.
The carrier, part of THE Alliance, said it understood that its customers “have access to opinions and news from a variety of third-party sources”, but wanted to “make clear certain developments in our recapitalisation plan”.
Yang Ming has been under considerable pressure to clarify its decision to temporarily suspend share dealing, and shippers are worried that the troubled Taiwanese carrier could follow Hanjin Shipping into bankruptcy.
One major UK shipper told The Loadstar recently that following a review of its approved carriers, a decision had been taken not to use Yang Ming until there was an improvement in its financial position.
Yang Ming said today the voluntary suspension of the trading of its stock until 3 May was “simply a standard procedure that is routinely carried out in the Taiwan Stock Exchange” when a company is recapitalised.
It said: “Our recapitalisation plan will initially allow Yang Ming to reduce its equity capital, after which infusion of new capital is then obtained from various private and public investors. At the appropriate time we will announce the identities of those new investors.”
Yang Ming added that, during the suspension, the number of shares will be reduced to some 1.4bn, carrying a new value “anticipated to be about two times the share price prior to 19 April”.
It added that the recapitalisation was “one of several components of Yang Ming’s comprehensive plan to improve the company’s financial structure”.
The carrier repeated that it had access to a government approved bail-out package of $1.9bn that could be drawn if required.
It said it remained “optimistic” about an improved performance in the first quarter after it had pared back its loss in Q4 2016 to $62m, from a deficit of $151m recorded in the previous three months.
However, Drewry Financial Research Services (DFRS) said it doubted whether Yang Ming would achieve profitability this year, despite the more encouraging signs in the market.
“We believe high cost structure coupled with debt burden will keep Yang Ming in the red in 2017,” it said.
Meanwhile, in a comment to The Loadstar’s news story on Friday, Brigstocke Lexden agreed that share consolidation was a “legal and a normal market practice” and suggested that “many commentators (including journalists) appear not to understand what share consolidation actually means”.
But the author was also critical of the Yang Ming explanation to “pare down accumulated loss”, describing it as “absolute rubbish” which was “probably written by a PR person with no understanding of the stock market”.
“The important part of the Yang Ming restructuring is the ‘private placement’ of new shares, which will dilute the shareholdings of existing shareholders who were not asked to participate.”
Alessandro Pasetti, The Loadstar’s financial columnist, today described the initial $54.4m raised by the recapitalisation as “a drop in the ocean”.
In an analysis on 3 April, Mr Pasetti wrote: “If it keeps performing as it has done in the past few months, and excluding state aid, Yang Ming could run out of money in less than nine months.”