Yang Ming's financial struggles require new equity capital infusion

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Dive Brief:

  • THE Alliance member Yang Ming is in need of a minimum of $300 million in equity over the next 12 months to offset its current debt ratio, JOC.com (paywall) reported.
  • Trading on the company’s stock was temporarily halted as it aims to enact a capital reduction plan, which it called standard procedure. Trading will resume on May 4th. 
  • Since January, the embattled Chinese line has attempted to downplay a potential looming failure by referring to the $1.9 billion available from the Taiwanese government that operates as emergency reserves for the shipping industry.

Dive Insight:

Memories run long in the ocean transport industry, particularly among shippers who were burned by Hanjin’s dramatic collapse last August. Although Yang Ming has repeatedly attempted to demonstrate its intent and plans to survive, the numbers tell a less rosy picture, as the company’s debt to equity ration has ballooned to 486%

A large part of the concern is the line’s need to replace old equity capital with new investors, but refuses to name new investors, even while citing the availability of Taiwanese government support. To further complicate matters, Yang Ming is a member of the only alliance offering guaranteed delivery regardless of solvency, which could put the other alliance members at a disadvantage as well. 

Ultimately, the determination of the Taiwanese government to maintain the line should ensure its survival, but alarms are sounding and the industry and onlookers are taking notice.

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Filed Under: Freight
Top image credit: Kurschner

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