Analysis: can Yang Ming's new bid to raise cash keep insolvency at bay?
I’m afraid that Yang Ming remains in a limbo – and its latest announcement is proof of ...
In a further move to reassure shippers of its continued financial viability, Taiwanese container line Yang Ming has revealed that its government has upped its stake in the carrier, and is likely to do so again.
Yang Ming is set to raise US$54.4m through a privately placed rights issue with six Taiwanese investors and companies.
It will offer 161m new shares priced at $0.34 per share to The National Development Fund of the Taiwan Government (NDF), Taiwan Navigation, Taiwan Chinachem, T3ex Global Holdings, Mercuries Life Insurance and Superstar Investment.
The key participant here is the NDF, established by the Taiwan government and which will hold a 6.39% stake in Yang Ming after the first round. The total government-owned Yang Ming stock, including the holdings of the ministry of transport and communications, will increase to 36.62% after the completion of this first round.
“It is expected the NDF will continue its support of Yang Ming in subsequent rounds of issuance,” the line said in a statement
“These investments by the Taiwan government and the private sector demonstrate the staunch and diverse support of Yang Ming,” it added.
“It is expected that the company’s financial recovery plan will ultimately result in a greater percentage of government-owned and controlled interest in Yang Ming.”
The company published a financial recovery plan in late January, after industry analysts had questioned its financial strength in the wake of the Hanjin bankruptcy and after itself accumulating some $1.2bn in losses since the 2009 financial crisis.
However, in contrast to the behaviour of Hanjin last year when similar concerns undermined its attempts to reverse its fortunes, Yang Ming management mounted a very public defence of its accounts within days.
Drewry Financial Research Services said: “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 YMM, expecting a highly dilutive and large equity injection.”