Hapag-Lloyd AG came a step closer to securing federal aid after German Chancellor Angela Merkel’s government agreed to contribute to a loan-guarantee program for the container-shipping company.

Hamburg-based Hapag, in which tour operator TUI AG holds the biggest stake, has applied for 1.2 billion euros ($1.75 billion) in government loan guarantees. The Economy Ministry in Berlin today said it agreed to share with Hamburg city 90 percent of the guarantee costs that Hapag needs after a drop in German exports hurt its business.

Hapag, Germany’s biggest container shipper and the fifth- biggest worldwide, sought the rescue after the recession and a glut of new vessels led to a slump in freight rates. The container line expects to post a loss of about 900 million euros this year and as much as 500 million euros in 2010, Frankfurter Allgemeine Zeitung reported Sept. 16, without saying where it got the information.

Hapag “deserves this rescue,” Michael Freytag, finance minister of Hamburg state, one of the owners of the company, said in an e-mailed statement. “The company was plunged into the maelstrom of the international shipping crisis through no fault of its own.” The state aid may infringe European Union competition rules, the Financial Times Deutschland reported on Sept. 16.
German federal lawmakers, guardians of the budget, need to vote on the aid on Oct. 7.
German companies can tap the government’s 115 billion-euro “Economic Fund” provided they can prove their liquidity difficulties post-date the start of the international financial crisis, set at June 30 last year, and can convince a panel that their businesses remain viable. (Bloomberg)