HSH Nordbank Cuts Bad Ship Loans by $300 Million in Navios Deal

HSH Nordbank AG, the world’s largest shipping bank, agreed to sell a portfolio of 10 unprofitable vessels to Greek freight company Navios Group to reduce its risks on loans by about $300 million.

Navios, a Piraeus, Greece-based shipper, will pay $130 million for about 40 percent of the loans and guaranteed to operate the five tankers and five container ships for at least six years, the Hamburg-based bank said today in a statement.

The remaining $170 million will be converted into a participating loan for 10 years, according to the statement. During that period the German state-owned lender will receive 80 percent of the returns generated by the ships, excluding operating and capital costs.

“The insolvent vessels, or those on the brink of insolvency, are transferred to a highly professional operator that is able to secure an economically feasible operation of the vessels throughout the shipping crisis,” Wolfgang Topp, the head of HSH’s restructuring unit, said in the statement. “There is a significant reduction of risk for the financing bank.”

The ownership of the ships, which were built in 2006 or later, will be transferred to Navios. They include tankers with volumes of as much as 80,000 deadweight tons and container ships with a capacity of as much as 3,400 standard containers.

HSH said it is in talks with owners of other vessels in its loan portfolio to reach similar agreements to reduce its holdings by more than 1 billion euros ($1.3 billion).

To contact the reporter on this story: Nicholas Brautlecht in Hamburg at nbrautlecht@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net

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