Hamburg’s airport can trace its roots back to an inspirational speech to a meeting of locals by airship pioneer Count Ferdinand von Zeppelin, whose vision lead to its creation on the port city’s northern fringes more than a century ago.
Sadly, however, history now remembers Zeppelin more for the tragedy that struck his innovative fleet when the Hindenburg crashed in flames in the US some 30 years later, taking his international business with it.
Now, long after Count Zeppelin’s initiative, Hamburg airport is poised to be the site of another pivotal meeting that, if it turns out badly, could be similarly epoch-defining, this time for German shipping.
At 10.30am next Thursday, in the modest Courtyard Marriott hotel on the fringes of the airport, public notary Johannes Beil will call to order a meeting of holders of €275m ($309m) of bonds issued by Rickmers Holding in 2013.
The noteholders will be asked to vote on whether they are willing to accept the latest restructuring proposal put forward by the group’s board, after more than 18 months of stumbling attempts to put the heavily indebted group on a firm footing.
If they accept, they are set to receive an 8.875% interest payment on 11 June, and enable the 180-year-old group to follow through on a long-term restructuring plan that will see current sole shareholder Bertram Rickmers’ stake in the company diluted to 24.9%.
But if they reject the plan — or if the meeting fails to provide a quorum — Rickmers’ management says its status as a going concern would lapse. It will leave them with no alternative than to file for insolvency that will lead to the group being wound up, they warn.
Whatever the outcome, it will mark a pivotal moment for northern Germany’s once world-beating boxship sector and the banks that helped fuel its rise in the late 1990s and 2000s.
Insolvency could be calamitous not only for Hamburg but for the wider liner sector, threatening hundreds of jobs and throwing assets up for sale in a weak market.
The scale of Rickmers’ problems should not be underestimated. At the end of 2016, the group operated a fleet of 114 vessels totalling 5.8 million dwt and 424,791 teu, but was saddled with an unsustainable net debt of €1.4bn. At the start of this year, it employed more than 1,600 seafarers and nearly 500 shore-side staff in offices in 13 countries.
Since 2011, a new management team led by energetic outsider Ignace Van Meenen has been working through potential solutions, but the failure of an initial public offering in March 2016 pulled away a vital source of fresh equity.
It has already sold Rickmers-Linie and is winding up Rickmers Maritime Trust in Singapore.
The latest plan involves moving 75.1% of Rickmers into a new Luxembourg holding company, the shares of which could be sold in 2020 to offer bondholders a payback of up to 40% if markets co-operate.
Rickmers claims liquidation now would pay out 3.5% on ‘base case’ assumptions, but perhaps just 2.3% in a worse case. In any event, it would be less than the 8.875% coupon bondholders would receive immediately if they agree.
Rickmers says a simpler debt-for-equity swap would leave the company with a significant tax payment it would be unable to settle.
Banks have agreed to take their share of pain, with HSH Nordbank sacrificing up to $190m. UniCredit, Deutsche Bank, Nord/LB and DNB have all made contributions to the restructuring.
Van Meenen believes Rickmers has been crucified for being transparent, despite having made repayments of interest and principal of over $200m every year for more than five years. Rickmers is merely a barometer of the strain in the rest of the industry, he told us a few months ago.
If Rickmers does collapse into insolvency, then to traditionalist locals it may be seen as the failure of the Anglo-American style of globalised corporate finance that remains so distrusted in some parts of Europe.
But that would ignore the fact that the problem Van Meenen and his colleagues have been trying to correct was fuelled by the huge volume of ill-judged lending to the boxship sector made by Germany’s landesbanks, which are pillars of the traditional -Mittelstand.
Germany’s shipowners, operators and banks have stumbled over the past decade as they desperately sought solutions for unserviceable debts. There have been watershed moments before, but Rickmers may well prove decisive.
After the shock of the Oetker family’s sale of Hamburg Sud to Maersk for $4bn, the prospect of the collapse of one of German shipping’s most famous names inevitably would have deep and lasting ramifications.
