By Nicholas Brautlecht
(Bloomberg) — Hapag-Lloyd AG adjusted its initial public offering plan for the third time this month, potentially depriving part-owner TUI AG of an option to sell any of its holding, in a bid to attract investors spooked by a dismal outlook from shipping-industry leader A.P. Moeller-Maersk A/S.
The Hamburg-based container carrier, citing “ongoing market volatility,” now plans to sell stock at 20 euros to 22 euros apiece, offering a total of 15.2 million shares that include 13.2 million in a capital increase. TUI, which holds 14 percent of Hapag-Lloyd, is reducing the number of shares it’s seeking to sell to 1.9 million, now restricted to an over-allotment offering to meet any excess demand. The German tour operator had originally planned to sell as many as 4.2 million existing shares in the shipping company.
Hapag-Lloyd is going public as the container-shipping industry battles an oversupply of vessels and low freight rates. Friday’s price reduction follows a 40 percent cut in planned proceeds to $300 million on Oct. 14, a goal it’s sticking to, and a one-week extension of the offer period on Oct. 27. The company had planned to sell stock in a price range of 23 euros to 29 euros, offering as many as 15.7 million shares including 11.5 million in new stock.
Three trading days before the Nov. 3 closing of the offer period, demand will at least match the stock on offer within the new price range, according to a term sheet distributed after the Friday announcement. Hapag-Lloyd still expects to start trading on Nov. 6, according to the document.
Copenhagen-based Maersk, citing a deteriorating market in the third quarter and October, lowered its full year profit forecast by 15 percent on Oct. 23, sending its shares to a two- year low. Hapag-Lloyd, the world’s No. 5 carrier in terms of fleet size, sought to calm investor fears on Oct. 26 by affirming its 2015 forecast in response. A $170 million quarterly loss posted on Thursday by No. 7 carrier China Shipping Container Lines added further pressure on Hapag-Lloyd’s stock sale.
Based on a book value of about 33.59 euros per Hapag-Lloyd share, derived from figures for the total stake as of June 30, Hanover-based TUI would incur a book loss exceeding 13 euros a share should the stock be priced at 20 euros.
Hapag-Lloyd’s plan to sell stock by the end of 2015 is part of a shareholder agreement from the company’s merger last year with the container-shipping operations of Valparaiso, Chile- based Cia. Sud Americana de Vapores SA.
–With assistance from Francesca Cinelli in Milan.
©2015 Bloomberg News