FRANKFURT, Jan 22 (Reuters) - Fourteen container vessels managed by German shipping group Claus-Peter Offen will be sold in a fire sale because their income is no longer enough to service the loans.
“The owners are being asked to agree to a sale by February 18,” Claus-Peter Offen, who owns the shipping group of the same name, told Reuters on Tuesday. “We are hoping for some sort of interim solution in which the creditors and new investors would buy the ships,” he added.
Banks and investment funds are increasingly looking at forced sales of ships to recoup some of the loans owed to them by shipping companies hit by a four-year sector slump, the worst on record.
The fund MPC Offen Flotte - organised by issuing house MPC Capital - bought the ships for $630 million five years ago, using 177 million euros ($236 million) in equity from 7,000 investors, 20 million euros from Offen, as well as bank loans.
MPC Offen Flotte’s ships are relatively small - 9 of them can take 1,800 containers and 5 of them can to load 2,800. This leaves them particularly vulnerable to the sector crisis, in which shipping groups turned to large, economically efficient ships.
Charter rates for ships with a capacity of less than 4,000 containers will likely remain at about $6,000 a day this year, while those for ships loading more than 8,000 containers will see prices remain at a “sufficient” level of $30,000-40,000, Offen said.
Claus-Peter Offen is managing the 14 vessels and has leased them to shipping liners such as CMA CGM, MSC and Hamburg Sued. The lease contracts for the ships are still valid. However, rates have come down two thirds from an original $19,000 a day, leading to an annual loss of $56 million, Offen said.
The fund tried to raise additional equity from its investors to carry out a restructuring plan. But it was unable to collect more than a quarter of the 24 million euros it needed, Offen said.
“For the banks, that was not enough,” he said, adding that the sale which is now being pursued will likely not generate enough cash to repay the loans the fund took out from HSH Nordbank, Commerzbank and DnB. Equity investors are set to lose all of their money.
Separately, Offen is selling 10 smaller ships it bought in the 1990s, which are loss-making but debt-free, Offen said, adding his group - which has manages 123 ships and has annual sales of roughly 1 billion euros - will still post a profit for 2012.
HSH and Commerzbank declined to comment while DnB was not immediately available for comment. ($1 = 0.7510 euros) (Reporting by Arno Schuetze; additional reporting by Camilla Knudsen; editing by Louise Heavens)