Yang Ming Marine Transport Corp (陽明海運) yesterday announced a capital reduction plan to offset the company’s accumulated net losses and issue 1 billion new shares for a capital injection in an effort to improve the company’s finances.
The decision came on the same day the company reported an unprofitable quarter ending on Sept.30, its sixth unprofitable quarter.
Last quarter’s net loss was NT$4.65 billion (US$147.53 million), with a negative gross margin of minus-6.62 percent and negative operating margin of minus-16.17 percent, the company’s filing with the Taiwan Stock Exchange showed.
That brought the company’s combined net losses to NT$16.14 billion in the past six quarters, according to the filing.
Yang Ming plans to cut its capitalization by 53.27 percent, or NT$16 billion, to raise its book value per share from NT$5.76 to NT$12 per share, company president Vicent Lin (林文博) told a news conference at the Taiwan Stock Exchange in Taipei.
Lin said Yang Ming is to use its capital reserve to offset the remaining NT$140 million of net losses.
The company plans to issue 1 billion new common shares via private placement, Lin said, adding that Yang Ming is in talks with some strategic and state-owned investors.
However, the price of the new common share has not yet been decided, Lin said.
Yang Ming is to initiate the capital reduction scheme before the end of this year and the capital injection program at the beginning of next year, after it receives shareholder approval at a provisional shareholders’ meeting on Dec. 22, Lin said.
The company has seen improving demand since South Korea’s Hanjin Shipping Co filed for bankruptcy at the end of August, Yang Ming chairman Bronson Hsieh (謝志堅) said.
“Hanjin’s 7 percent global market share reallocated to other shipping companies in the past few months, which largely increased Yang Ming’s orders,” Hsieh said.
Yang Ming is expected to have a robust performance this quarter due to changing market dynamics, despite a traditionally slow fourth quarter, Hsieh said.
He said he expects the momentum to extend into the first quarter of next year, as shipping demand increases before the Lunar New Year holiday in January next year.
Hsieh declined to say if Yang Ming could turn profitable this quarter or next quarter on the improving demand.
As part of the efforts to accelerate the company’s turnaround, Yang Ming on Wednesday last week said more than 60 directors and officials agreed to cut their salaries by between 30 and 50 percent.
The salary cuts are expected to reduce yearly costs by about NT$30 million, the company said.
Shares of Yang Ming rose 0.74 percent to close at NT$6.85 in Taipei trading yesterday, underperforming the TAIEX, which gained 1.34 percent.
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