Yang Ming has tried to calm customer concerns around its debt by announcing that it has raised US$54 million from several private investors in the first round of its comprehensive recapitalization plan, with “vast interest” from current shareholders.
The eighth largest container shipping company in the world, operating a fleet of 98 vessels with a capacity of nearly 593,000 TEU, also said it was seeing “a scenario of stronger demand over existing supply” on many of its trade lanes.
Yang Ming stated that it was “confident” in achieving its recapitalization goal over the course of 2017 and that recent performance indicators showed signs of recovery.
The Taiwanese shipper‘s plan involves a reverse split of its outstanding shares and multiple rounds of private placement.
A reverse stock split is a process by which shares of corporate stock are merged to form a smaller number of proportionally more valuable shares.
Yang Ming’s financial troubles started last year when the industry was struck by a backlash of oversupply.
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In January, Drewry Financial Research Services (DFRS) said that Yang Ming had the industry’s most leveraged balance sheet, with a net gearing of 437% at the end of Q3, 2016.
The findings meant that the container carrier was suspected to be the next victim of overcapacity and suffer the same demise as South Korea’s Hanjin, which declared its bankruptcy on August 31, 2016.
Since then, a wave of carrier consolidation has led to unsubstantiated claims that Evergreen may be planning a merger with its financially troubled Taiwanese compatriot.
Yang Ming’s statement added: “Thus far, the amount of private placement pledged by investors already exceeds the amount of capital Yang Ming raised in the first round of issuance.
“Additionally, while this round currently is limited to select investors only, Yang Ming is studying the feasibility of opening the remaining rounds of issuance to current shareholders as well, in response to the vast interest exhibited by current shareholders to participate in the placement.”
