Monday, October 5, 2009

CMA CGM Turns Up The Heat On Investors

Pressure Mounts to Gain State Aid for French Giant
Shipping News Feature

FRANCE – Marseille based container shipping giant CMA CGM SA, the worlds third biggest in the market, are actively seeking state funded help according to reports today. As detailed in the Handy Shipping Guide last month Msieu Jacques Saade, boss of the group has been arguing long and hard for assistance to fight off what he sees as unfair competition.

Now it would appear that the fight to secure the company’s future is hotting up. On the 29th September the Sarkozy established Fonds Stratégique d'Investissement (FSI), stated it would only provide funds to the group once debt was restructured. To this end it seems CMA CGM is courting assistance wherever it can.

Neither FSI nor CMA CGM were available or declined to comment on the present situation and will not confirm or deny rumours that a call has gone out to creditors to waive or defer part or all of the largest claims. It is said however that the company has breached loan agreements which total almost $4 billion and has a total of $5.6 billion owing to its banks which include European and Asian company’s, particularly French and Korean financial institutions.

It seems unlikely that any investment in the group will not be attached to an equity sharing which would mean that the Saade dynasty would have to part with their current 100% holding. It will be interesting how any funding compares with the € 1.2 billion in state aid sought by Hapag Lloyd from the German Government, covered in our previous articles.

CMA CGM are supporting their call for funds by pointing out that their affairs are heavily charter oriented, with 180 vessels completing charters over the next year so they can be returned to their owners. They have also been following a stringent cost cutting plan including laying up ships and cutting staff, although development of the new 33 storey, 148 metre high, company headquarter building, situated in Marseille’s Euromediterranée district, and designed by Iraqi architect Zaha Hadid, will apparently continue.