Troubled German regional lender HSH said it had cut its exposure to bad shipping loans by persuading struggling debtors to transfer ownership of some vessels to U.S.-listed shipping company Navios.
The deal may provide a blueprint for the financing of ships that are insolvent and a way for the Hamburg-based lender to cut its 9 billion euro ($11.7 billion)portfolio of bad ship loans, which has already forced it to seek state aid.
“We are already in talks with other ship owners, which showed interest in this transaction”, said Wolfgang Topp, who heads up HSH Nordbank’s restructuring unit.
Struggling debtors that owe HSH 300 million euros ($390 million) worth of loans have agreed to transfer ownership of 10 tankers and container ships to Navios, HSH said.
In exchange, Navios will give HSH around 130 million euros in cash. The remainder of the debt is converted into a participating loan that gives HSH the opportunity to recover the original amount if the markets improve.
Navios has pledged to contribute fresh capital and operate the ships for at least six years.
Under the deal, ship owners are released from their debt obligations.
HSH plans similar deals this year to restructure shipping loans with a total asset volume worth more than a billion euros.
Previous efforts to restructure the loans had proven unsuccessful, the bank said.
In total, HSH has financed 2,800 ships and has 26 billion euros worth of shipping loans on its books. Of these loans, 9 billion euros, equivalent to 1,100 ships, have already been transferred to its restructuring unit. (Reuters)