CMA CGM, the French shipping company that owns and operates Australian National Line, is involved in talks to reschedule an estimated $A5.7 billion of debt on which it is unable to make payments.
In doing so, CMA CGM becomes the largest container line in the world so far to be forced into a restructuring in the face of the losses brought on by the biggest crisis to hit the industry.
The company bought ANL in 1998 when it was sold off in an early privatisation by the Howard government.
CMA CGM, based in Marseilles, is the world’s third-largest container ship fleet operator. It has been reported to be under increasing financial pressure for the past three or four months.
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Media reports, including this one in the Journal Of Commerce, said the company has ordered too many new ships and has too much debt. “The French carrier has 60 large new container ships on order that are scheduled for delivery through 2012 and accumulated a debt of $5 billion on which it is no longer able to meet payments, according to the French journalists’ website econostrum.info, which said CMA CGM is asking its creditors to freeze the repayments for one year.”
The savage slump in world trade since the failure of Lehman Brothers late last year had taken its toll on the container carriers because that’s where the slump has been deepest as manufactured exports from Japan, China, Taiwan, Hong Kong and parts of Europe collapsed earlier this year and remain deeply below levels of a year ago.
Banks are getting much tougher on debt, especially in Europe (and in Germany and the UK in particular), especially with talk that the big lines have heavily over-ordered every type of vessel, especially huge container carriers.
In the statement issued overnight, CMA CGM, which is privately owned by Syrian-born French businessman Jacques Saade and his family, said it had formed a committee of French, European and international banks to conduct the negotiations.
“The committee will propose suitable measures to address the group’s short- and medium-term financing requirements with a view to strengthening CMA CGM’s capital structure and, in so doing, ensuring its ongoing development,” CMA CGM said.
The launch of the rescue efforts follows talks last week with the French government about aid for a restructuring. The latest statement made no mention of any government aid, but added that: “The French state is aware of this initiative and will be kept regularly updated on the progress made.”
The statement said the company would continue with initiatives to cut costs, renegotiate (and, in some cases) cancel ship deliveries.
Saade has admitted in recent comments in France that the company is losing money at the moment.
There are no details of the banks involved, but some media reports claim that the Korean government-owned export finance bank may be a major creditor because of the large number of new ship orders CMA has placed with shipyards in that country.
CMA’s statement follows restructurings and refinancing deals for Germany’s Hapag-Lloyd, Israel’s Zim Israel and Chile’s CSAV and CCNI. These and many other container lines have lost billions of dollars.
The ANL website says that as part of CMA, it now employs more than 3000 staff globally and moves 240,000 cargo containers per year.