Yang Ming Share Trading Halted as Carrier Moves to Reduce Equity Capital

yang ming containership

By Gavin van Marle

(The Loadstar) – Trading in the shares of embattled Taiwanese carrier Yang Ming were suspended on the Taipei stock exchange yesterday to allow the company to reduce its equity capital by over half.

The suspension is due to last until 4 May, as it decreases its share count from three billion to 1.4bn, a decline of 53%.

In a brief statement to the stock exchange, the company said the action was “making up losses”.

There won’t be any reduction in the company’s overall market capital, however, with the 1.4bn shares trading at NT$13.15 (US$0.4) compared with the current price of NT$6.15.

Since the turn of the year, Yang Ming has sought to reassure investors and customers it was heading towards financial security, with the Taiwanese government set to inject US$1.9bn and another US$54m to be raised in a rights issue with six Taiwanese investors.

This was accompanied by drastic salary cuts at the top level, with senior executive salaries reduced by 50% and line managers by 30%.

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However, as The Loadstar has previously reported, these measures may not be enough to return Yang Ming to profit this year. Such is the depth of its debt and the strain its gearing – which reached 457% at the end of last year, according to Drewry Financial Research Services (DRFS) – puts on its balance sheet.

DFRS noted: “We reiterate our view that, despite the current capital reduction and the government’s bailout package, which is targeted towards rescuing the entire local industry and not just Yang Ming, the measures undertaken may seem insufficient unless Yang Ming raises more equity.”

And it added: “Despite a better outlook for freight rates in 2017, we believe high cost structure coupled with debt burden will keep Yang Ming in the red in 2017.

“Profitability can only be restored by a meaningful restructuring, driven by asset sales, debt restructuring and a large fresh capital infusion.”

DFRS valued the share price at NT$3.50.

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