Hafnia shifts assets to new company

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The Independent Online
COPENHAGEN (AFX, Reuter) - Hafnia Holding, the troubled Danish insurer, said yesterday it had suspended all payments and was transferring all assets to a new company.

As trading in the company's shares was suspended on the Copenhagen bourse, Hafnia said it had negative equity of Dkr100m ( pounds 9.25m).

Hafnia said that it would place its assets, but no liabilities, in the new holding company, Hafnia Holding of 1992, which will be the parent company for its insurance and banking activities.

Explaining the move, Hafnia said a guaranteed share issue in July raised Dkr1.9bn, but it had an unrealised loss of more than Dkr700m on holdings in Baltica Holdings and Skandia. Discussions with interested parties on the disposal of these holdings had not produced any result so far.

In addition, the negative trend in Danish bonds and equities had necessitated a write- down of Dkr500m on holdings.

The new company would have equity of Dkr5.9bn and sufficient financial strength to carry on Hafnia's banking and insurance activities, Hafnia said.

On the Stockholm bourse, the Skandia share price fell Skr10 to Skr66 before recovering to Skr69 on news of Hafnia's suspension of payments. In Olso, shares in Uni Storebrand, a large shareholder in Hafnia, fell 11 per cent to Nkr16.

Banking stocks were sharply lower in all three markets, particularly those listed on the Copenhagen bourse. Den Danske Bank said it saw no necessity to make further loss provisions for its Dkr1.2bn loans to Hafnia. Danske has said it has written down Hafnia shares held in connection with the recent share issue by Dkr57m.

The news also led to sharp foreign selling of Danish government bonds.