Hamburg-headquartered HSH Nordbank is ramping up the efforts to shed EUR 1.5 billion (USD 1.7bn) of bad shipping loans accumulated over a seven-year slump in the industry by finding shipping companies that would take over ships from defaulting debtors, German business and finance newspaper Handelsblatt reports.
HSH Nordbank will try to use the same model applied on the Greek Navios Group in 2013, when the bank managed to reduce USD 300 million in non-performing loans. Upon transferring 10 vessels (five tankers and five container ships) to Navios, the previous owners were released from their respective credit obligations. In return, Navios paid approximately USD 130 million to HSH Nordbank – around 40 percent of the outstanding loan amount – and secured continued operation of the vessels for at least six years.
The remaining approximately USD 170 million of the loan amount was converted into a participating loan held by HSH Nordbank. 80 percent of the free cash flows generated by the vessels– post all operating expenses and capital costs – are used to service the participating loan.
“I expect that we will quickly settle one, two, or three transactions with a gross value of EUR 1.5 billion this year ,” Wolfgang Topp, Head of HSH’s restructuring unit, told Handelsblatt. ” The problem last year was that our market expectations, especially for bulk carriers, was different from that of market participants.”
World Maritime News Staff