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Yang Ming expects the recapitalization plan will result in immediate benefits to its balance sheets
Yang Ming has elaborated on a statement it made last week
aimed at updating its customers about efforts to maintain competitiveness.
In a customer advisory
posted on its website Monday, the Taiwanese ocean carrier said it has "instituted a recapitalization plan aimed to provide immediate benefits to its balance sheets and improve on its liquidity."
Yang Ming said, "In a December 22, 2016 shareholders' meeting, the shareholders voted to approve a stock consolidation plan. This move was designed to pare down accumulated loss. Additionally, it was announced at the meeting that Yang Ming would receive injection of fresh capital from new investors. The first stage of this injection of capital will be from various government and private entities, including banks and financial institutions. Yang Ming will issue new stock to these investors, and with the new capital, Yang Ming expects immediate benefits to its balance sheets. With this strong showing of government support, it is also expected to help enhance additional private sector investment in Yang Ming."
Yang Ming anticipates the Taiwanese government's share in the carrier will increase well beyond the current 33.3 percent held by the Ministry of Transportation and Communications of Taiwan.
"While the predictions for 2017 appear to show some improvements for carriers, Yang Ming remains prepared to take any measure necessary to maintain its competitiveness, without sacrificing its dedication to its customers," the company said, noting it has the option to draw on a $1.9 billion fund the Taiwan government has set up for shipping companies.
Yang Ming issued the statement last week in response to queries related to a report that Drewry released last week, which expressed concern over Yang Ming's debt.
"Customers and vendors can rest assured that Yang Ming is not in default
of any obligations and any suggestions otherwise are patently false," the carrier said. "As
it has been repeated in early advisories, Yang Ming has never approached
its creditors with any demands to restructure any part of its debt, and
Yang Ming does not have any intentions to do so going forward. Yang
Ming has never failed to deliver in difficult times, even in the wake of
the largest carrier bankruptcy."
Rahul Kapoor, director of Drewry Financial Research Services, updated his comments on Monday, saying, “We believe the company has been forthcoming and transparent and are appreciative of the company's quick and clear response. This should likely soothe both the customers and investors' nerves. However, we await further actions to review our stock recommendation on YMM, expecting a highly dilutive and large equity injection."