Hapag-Lloyd Analyst Event Financial Structure and Path to de-leveraging Hamburg, 21 November 2017

Transcription

1 Hapag-Lloyd Analyst Event Financial Structure and Path to de-leveraging Hamburg, 21 November 2017

2 Management summary Integration Financial Debt of UASC Strong Deleveraging Maintain Adequate Liquidity Reserve Efforts to reduce Interest Burden USD 4 bn of Financial Debt in approx. 60 different financing agreements have been renegotiated until Closing Since Closing UASC Bank Relationship has been handed over to Hapag-Lloyd Facilities have been fully integrated into the Hapag-Lloyd Treasure Management System (TMS) prepared for straight through processing Capital Increase of USD 414 m has been used to prepay existing debt Free Cash flow to be used to further prepay Financial Debt Target to deleverage to 3,5x Net Debt / EBITDA until 2019 As per September 30 th Cash on Accounts in the amount of approx. USD 1 bn. net of bond proceeds In addition to this existing Cash Revolving Credit Facilities are in the process of extension in the amount of USD 480 m 2018/2019 EUR Bonds have been refinanced with significant lower coupons By applying proceeds from Capital Increase expensive facilities have been pre-paid Additional refinancing measures implemented to reduce interest burden further 2

3 STRICTLY CONFIDENTIAL Merger with UASC and BOREAS Bond issuances are main highlights of financial year 2017 Q1 Q2 Q3 Q4 Refinancing of UASC Facilities UASC Waiver Request and transfer of commitment to continuing lender Closing 24 May Capital Increase I Capital Increase II 3 BOREAS I Listing of new shares EMTC Pre-Payment Release LTV Collateral Boreas II 450m HYB Issuance (2022) 450m HYB Issuance (2024) Start THE Alliance 1 April China Leasing Tranche I AGM 29 May China Leasing Tranche II USD 400 m China Leasing Tranche III RCF Extensions Use of Proceeds Pre-payments Voyage Cut-Over H1 Financials 29 August Q3 Financials 14 November

4 Outstanding Debt Balances Combined Entity Outstanding Debt Balances Combined Entity as per Sep 2017 [USD m] 1) vessel container corporate TOTAL Outstanding Debt 3,178 (36%) 1,160 (13%) 4,447 (51%) 2,112 (42%) HLAG 685 (14%) 2,223 (44%) UASC USD 8,785 m USD 5,020 m USD 3,765 m 1,066 (28%) 475 (13%) 2,224 (59%) COMMENT In Q prepayments of UASC unsecured corporate debt were made from the proceeds of the Capital Increase to an amount of USD 404 m In Q bond repayments of USD 532 m were made secured unsecured 2,733 (31%) 6,052 (69%) 1,667 (33%) 3,353 (67%) 1,066 (28%) 2,699 (72%) 4 1) Presented figures are repayment amounts not including interest accruals and IFRS accounting adjustments as per 30th September 2017

5 Financial Strategy & Objectives Objectives and Measures of Financial Strategy Objectives RATIONALE TARGET Safeguard adequate liquidity reserve Ensure at all times adequate liquidity to meet payment obligations and compliance with Financial Covenants Shipping is exposed to cyclical / volatile markets where peaks and lows need to be buffered in order to safeguard smooth operation Liquidity Reserve to consist of 700 USD m cash in accounts and USD m committed credit line with maturities in excess of 12 month Financial Reporting Covenant 450 USD m cash in account USD m Safeguard strong capitalization / minimum equity Target adequate leverage ratio Ensure at all time an adequate capitalization of the company to ensure: ability to buffer periods of low profitability in shipping cycles ability to attract and access external funding sources at competitive rates in capital intensive industry such as shipping Financial Covenant 30% of balance sheet total Ensure an adequate leverage of the company in order to optimize cost of capital below 3.5x until 2019 Safeguard room to maneuver from a financial perspective and optimize financing mix Improve Ratings from S&P and Moody`s 40% - 50% Net Debt / EBITDA < 3.5x 5

6 EQUITY LIQUIDITY Financial Covenants slightly changed over time due to CSAV and UASC merger Overview Hapag-Lloyd Financial Covenants prior CSAV Closing Post CSAV Closing Post UASC Closing Minimum Liquidity USD m 300 USD m 350 USD m Reporting Covenant 350 USD m 450 USD m 450 USD m prior CSAV Closing Post CSAV Closing Post UASC Closing The higher of: The higher of: The higher of: Minimum Equity EUR m OR 25% of Balance Sheet Total EUR m OR 30% of Balance Sheet Total EUR m OR 30% of Balance Sheet Total 6

7 Capital increase of USD 414 m successfully completed Key terms of the rights issue Offer size 11,717,353 new shares (c. 7.1 % of current share capital), resulting in EUR m of gross proceeds Freefloat Shareholders agreement/ Controlling shareholders Subscription price EUR 30 per share (17.8 % discount to XETRA closing price as of 27 September 2017, 16.8 % discount to TERP) 17.4% 25.0% CSAV 1) Use of proceeds Listing Distribution Repayment of existing indebtedness, with any remainder to be used for general corporate purposes Regulated market of Frankfurt Stock Exchange (Prime Standard) and the regulated market of the Hamburg Stock Exchange Public offer in Germany and Luxembourg Offering in the US to QIBs under Rule 144A Private placement to institutional investors outside the US in reliance on Reg S PIF 4) 10.2% 3) 14.5% QIA TUI 12.3% 176 m shares 19.0% Kühne 2) 13.9% HGV Take-up ratio 96% 7 1) CSAV Germany Container Holding GmbH 2) Kühne Maritime GmbH 3) Qatar Holding Germany GmbH 4) The Public Investment Fund of the Kingdom of Saudi Arabia

8 Deleveraging Capital increase Path for II UASC Corporate Debt financed by Capital Increase of USD 414 m Q4 2017: Financed from 404 USD m Capital Increase Proceeds COMMENT Use of proceeds from Capital Increase II reduce UASC corporate debt down to 659 USD m UASC Corp. Debt (Sep 17) UASC Corp. Debt (Oct 2017) Repayment of UASC Corporate Debt 8

9 Bonds are trading above par providing low yields Bonds trading USD Yield Curve vs. EUR Yield Curve Listing 3,0 % 2,5 % 2,0 % ,5 % 1,0 % ,5 % ,0 % -0,5 % HL EUR 7.75% 2018 HL EUR 6.75% 2022 ON 3M 6M 9M 1Y 2Y 3Y HL EUR 7.50% 2019 HL EUR 5.125% 2024 EUR Yield Curve 2,14% 2,25% 178 bps 194 bps 0,47% 0,20% 4Y 5Y 6Y 7Y 8Y 9Y 10Y 15Y 20Y 30Y USD Yield Curve EUR Bond 2024 EUR Bond 2022 EUR Bond 2019 EUR Bond 2018 Open market of the Luxembourg Stock Exchange (Euro MTF) Volume EUR 450 m EUR 450 m EUR 250 m 2) EUR 200 m 1) ISIN / WKN XS XS / A2E4V1 XS / A13SNX XS / A1X3QY Maturity Date Jul 15, 2024 Feb 1, 2022 Oct 15, 2019 Oct 1, 2018 Redemption Price as of July 15, 2020: %; as of July 15, 2021: %; as of July 15, 2022:100% as of Feb 1, 2019: %; as of Feb 1, 2020: %; as of Feb 1, 2021:100% as of Oct 15, 2016: %; as of Oct 15, 2017: %; as of Oct 15, 2018:100% as of Oct 1, 2015: %; as of Oct 1, 2016: %; as of Oct 1, 2017:100% Coupon 5.125% 6.75% 7.50% 7.75% 1) Full redemption on 1 October 2017; 2) Full Redemption on 15 October Source: Citi (27 October 2017)

10 AFTER RENEWAL STRICTLY CONFIDENTIAL CURRENTLY Adequate liquidity reserve is safeguarded with three RCFs extension of two RCFs already accomplished Maturities of Revolving Credit Facilities [USD m] Comments Hapag-Lloyd had three credit lines available in an aggregate amount of USD 460 m All three RCF s were to mature in autumn Container RCF 2018 GloCo RCF 2019 CTA RCF In order to safeguard and proactively manage the liquidity reserve of the company, Hapag-Lloyd successfully extended and increase two RCF s already EXTENSION FOR 2 FURTHER YEARS & UPSIZING OF CONTAINER RCF IN Already signed CTA-RCF was extended until 2020 at reduced margin levels Former GloCo RCF was refinanced by a new Boreas II RCF at same T&C but at a higher volume (USD 145 m) until 2020 Furthermore the Container RCF shall be extended until 2020 and increased by additional USD 75 m in order to safeguard further investments into containers and reefers Two banks (representing commitments of USD 135 m) are already credit approved - two further banks to commit USD 75 m expected to provide commitment end of the year Container RCF (Upsizing) Container RCF GloCo RCF CTA RCF 10

11 8 Lessors China Lease structure provides additional financial flexibility to Hapag-Lloyd Leasing Structure 1) Rationale Bank of Communications Financial Leasing Co., Ltd Peking 100% XIANG L16 Ireland B/C International Ship Lease Co. Limited Dublin Manager Agreement Anglo Eastern (Germany) GmbH Hamburg Hapag-Lloyd AG Hamburg Foreign Maritime Entity (FME) 100% Hull 1794 Co. Ltd. Marshall Island B/C B/C flaggingout High financing volumes Long tenors (10 years) Competitive pricing Fixed interest rates No Loan-to-Value tests On-Balance sheet treatment Unlimited access to asset (purchase obligation) German Flag possible and flaggingout Diversification of lender base 11 1) Exemplary overview for 5 T-class vessels (8.000 TEU) and 3 Express vessels (8.750 TEU) 3 Express vessels (8.750 TEU) with ICBC

12 Substantial free cash flow of USD 886 m in 9M 2017 Improved EBITDA major driver for CF generation Cash flow 9M 2017 [USD m] Operating cash flow Investing cash flow Financing cash flow -46 Proceeds from EUR 450 m 2024 Bond included in 9M cash balance. The 2018/2019 bonds were prepaid thereafter Free cash flow = USD 886 m 1,791-1,569 1, , Liquidity reserve EBITDA Working capital and other effects Investments Disinvestments / Dividends received Cash received from UASC Payments for Capital Increase / Changes in ownership interests Debt intake Debt repayment Interest payments / Dividends paid and other effects Restricted cash Liquidity reserve Note: USD figures as stated in Investor Report 9M 2017 Unused credit lines Cash and cash equivalents

13 Financial Debt Repayment Profile Capital increase II Repayment profile (maturities as contractually agreed) Facility 30th Sep 2017 [USD m] Vessel Financings 4,447 Container Financings 1,160 Current Interest [%] Repayment Profile (in USD m, incl. contractual maturities of envisaged prepayment measures) 2) Prepayment EUR Bonds 2018/19 with EUR Bond ,189 Total Vessel & Container 5, EUR Bond EUR Bond EUR Bond EUR Bond Total Bonds 1,595 Corporate secured 445 Corporate unsecured 1,138 Total Corporate 1,583 Net Accounting Effects -17 Total financial liabilities 8, % 5.0% 1) ) Q Prepayments of unsecured corporate debt with proceeds from capital increase 2) Prepayment of EUR Bonds 2018/19 with proceeds of EUR Bond 2024 issue 2) 13 1) Depending on LIBOR development 2) Repayment amounts not including interest accruals and IFRS accounting adjustments 3) Assumption that HLAG ABS program (not included in above figure) is annually rolled-over with +347 USD m. Current program is prolongated until 2018

14 Management summary Integration Financial Debt of UASC Strong Deleveraging Maintain Adequate Liquidity Reserve Efforts to reduce Interest Burden USD 4 bn. of Financial Debt in approx. 60 different financing agreements have been renegotiated until Closing Since Closing UASC Bank Relationship has been handed over to Hapag-Lloyd Facilities have been fully integrated into Hapag-Lloyd TMS prepared for straight through processing Capital Increase of USD 414 m has been used to prepay existing debt Free Cash flow to be used to further prepay Financial Debt Target to deleverage to 3,5x Net Debt / EBITDA until 2019 As per September 30 th Cash on Accounts in the amount of approx. USD 1 bn. net of bond proceeds In addition to this existing Cash Revolving Credit Facilities are in the process of extension in the amount of USD 480 m 2018/2019 EUR Bonds have been refinanced with significant lower coupons By applying proceeds from Capital Increase expensive facilities have been pre-paid Additional refinancing measures implemented to reduce interest burden further 14

15 Contact MICHAEL KASTL MANAGING DIRECTOR Treasury & Finance Hapag-Lloyd AG Ballindamm Hamburg Tel: +49 (40) Fax: +49 (40)

16 Disclaimer Forward-looking statements This presentation contains forward-looking statements that involve a number of risks and uncertainties. Such statements are based on a number of assumptions, estimates, projections or plans that are inherently subject to significant risks, as well as uncertainties and contingencies that are subject to change. Actual results can differ materially from those anticipated in the Company s forward-looking statements as a result of a variety of factors, many of which are beyond the control of the Company, including those set forth from time to time in the Company s press releases and reports and those set forth from time to time in the Company s analyst calls and discussions. We do not assume any obligation to update the forward-looking statements contained in this presentation. This presentation does not constitute an offer to sell or a solicitation or offer to buy any securities of the Company, and no part of this presentation shall form the basis of or may be relied upon in connection with any offer or commitment whatsoever. This presentation is being presented solely for your information and is subject to change without notice. UASC s Ltd. and its subsidiaries have been included in the figures from the date control was transferred on 24 May 2017.The key figures used are therefore only comparable with the previous year to a limited extent. 16