Buyer leaves SYMS on the shelf

THE future of cash-strapped Chinese container line Shandong Yantai International Marine Shipping has been thrown into question after takeover talks appear to have broken down.

Negotiations between the intra-Asia operator and potential buyer Grand China Logistics have stalled because of the line’s weak financial position and regulatory issues.

A source close to the company said Grand China Logistics, also known as Da Xin Hua Logistics, which is part-owned by the Hainan Airlines Group, had been the frontrunner to acquire SYMS. Talks have been going on for at least 10 months, but no deal has been finalised. “The poor financial condition of the line has become a burden for the sell side. It is natural for Grand China to think twice before taking a stake in it,” said the source.

SYMS has been losing money for a long time, hit by the notoriously low freight rates in the China-Japan trades on which the line has concentrated.

SYMS has fallen badly behind on ship charter payments, and several owners have now taken legal action in an attempt to recover the money owed.

The line has 19 ships on charter, and the prospect of these being returned to their owners has unnerved an already weak market. One shipbroker is openly talking about the containership charter market now being in freefall, with the SYMS situation compounding already deteriorating conditions.

The company’s outstanding debt stood at Yuan500m ($71m) in March this year when it invited investors to take a 90% stake in the business. The headquarters of SYMS confirmed late last week that the local government remained its owner, but declined to disclose any further information about the takeover or the financial status of the company.

Owned by the provincial government, SYMS will need to obtain regulatory approval from the State-owned Assets Supervision & Administration Commission of the State Council before selling any of its shares to private investors.

SYMS operates a fleet of 50 vessels totalling 440,000 dwt and 28,000 teu, and has been looking for a buyer since 2005.

According to ci-online, SYMS has 19 ships of around 19,000 teu on charter.

German owners and financiers Conti, Briese Schiffahrt and NSC/Fondshaus are among those now seeking legal redress for overdue charter payments. None would comment on the claims, but Conti is thought to be owed around $4m in charter payments and interest.