Yang Ming Marine Transport has initiated a major personnel reshuffle at the top level after booking provisions totalling almost TWD 1.39bn ($46m) related to two sale-and-leaseback deals.
President Vincent Lin has tendered his resignation, pending approval from the Taiwanese central government, which is Yang Ming’s largest shareholder.
According to exchange filings from the Taiwan-listed container line, vice-president Alice Ho was appointed chief financial officer as Shihchon Lee stepped down.
Patrick Tu, who had served at Yang Ming's Hong Kong subsidiary, replaced Kunjung Pai as chief strategy officer.
The exit of Lin and Lee is understood to be related to corporate governance issues connected to the sale terms of the 8,236-teu YM Utopia and YM Uberty (both built 2008). Pai’s was related to Yang Ming’s investments in SinoTrans PFS.
“Most board members agreed with the reshuffle,” a source close to the company told TradeWinds.
The source said the situation relates to the executives signing off on terms in earlier deals without notifying the board of directors.
“Yang Ming is a company with a long history, and sometimes due diligence was not carried out based on modern corporate governance standards. Hopefully this reshuffle will push the company to perform better.”
TradeWinds sought to contact Yang Ming spokesman Michael Shih by phone. A person who picked up the phone and did not identify herself said the company would not comment on the reshuffle as it was an internal matter.
Lin and Yang Ming’s public relations department did not immediately respond to emails seeking comment. Emails of Lee and Pai cannot be immediate found on Yang Ming’s website.
Yang Ming ordered the two post-panamax boxships at compatriot yard CSBC in 2005 for $94m each when newbuilding prices were peaking.
Later, the container shipping market turned bearish due to the financial crisis, and Yang Ming sold the ships in long-term leaseback deals in 2008 and 2009 to replenish its cash piles.
Buyback deals
The deals came with buyback obligations that were negotiated based on the market conditions prevailing at the time.
However, as secondhand boxship prices were on a long-term decline, Yang Ming declared those options would not be exercised in late 2019.
The company recorded a provision of TWD 1.08bn for the YM Uberty, which is on a 12-year charter to Bank of America due to expire in August, as compensation for the US lessor.
Yang Ming also booked a provision of TWD 311m for the loss of deposit related to the 10-year charter for YM Utopia with shipowner Morning Star, a single-ship vehicle that returned the vessel to its financial backer SinoPac Leasing.
In late January, Taipei-based SinoPac sold the YM Utopia to Greek shipowner Danaos for $28.3m.
