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Taiwan lines battle historical debt

Yang Ming and Wan Hai lines are looking at solving shortfalls in company finances in differing ways as the carriers’ report struggle with historical debt in spite of booming rates this year.

Yang Ming Marine Transport Corporation's new chairman, Cheng Cheng-mount, who took over from Bronson Hsieh on 1 October, said in a message to the company's staff that despite achieving an operating profit in the second quarter of 2020, the company's overall financial health is not robust.

The new chairman has asked the Taiwanese liner operator’s staff to submit suggestions on how the company’s finances can be improved, setting up an email address to encourage staff to send their suggestions on improving the company's performance and staff welfare.

Following years of losses, Yang Ming had an operating profit of TW$623.55 million (US$21.15 million) in Q2 2020, but after deducting taxes, the company suffered a net loss of TW$22.79 million (US$773,066) in the period. Cumulatively, Yang Ming had a net loss of TW$778.13 million (US$26.4 million) in H1 2020. With long-term debt of over TW$57 billion (US$1.93 billion) exceeding the equity of TW$18 billion (US$610.58 million), Yang Ming is highly leveraged.

New Yang Ming chairman Cheng Cheng-mount is looking for ways to reduce the company's debt.

Assuring employees that only himself and his secretary can access the emails, Cheng said, “I welcome everyone to express their ideas, whether it is for advice, suggestions or praise. I’ll do my best to help everyone solve the problem.”

Cheng said, “I believe everyone knows the current situation of the company. The financial figures are not very good-looking. The purpose of serving as chairman is to improve the financial situation and improve staff salaries in the shortest time. We have to work together to stabilise Yang Ming.”

Through various entities, the Taiwanese government has a stake of approximately 48% in Yang Ming.

Since Yang Ming became publicly listed, Cheng is the company’s first chairman to come from a non-shipping background, financial background.

Meanwhile, another Taiwan operator, Wan Hai Lines, announced a TW$2.5 billion (US$86.86 million) bond issue on 15 October to raise working capital and repay debts.

Underwritten by Masterlink Securities the bonds will carry an interest of 0.97% per annum and mature after five years.

Wan Hai, primarily an intra-Asia carrier, said that as of 30 June 2020, it had bonds of TW$13.9 billion due in the long term. The company is now the tenth-largest liner operator, boasting 68 owned ships of 170,332TEU after taking delivery of three 3,055TEU vessels from Japan Marine United Corporation in September. Another five sister ships are scheduled for delivery in 2021. Wan Hai also operates 43 chartered ships, adding 143,286TEU to its fleet.

Seeking to assure investors, Wan Hai stated that as of 30 June, the company had net assets of TW$35.97 billion (US$1.22 billion).

Martina Li
Asia Correspondent

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