Report: CMA CGM seeking equity investors

Report: CMA CGM seeking equity investors    CMA CGM is reportedly seeking an injection of private equity to account for mounting debt resulting from the poor container shipping market in the past year, according to a report by Bloomberg Monday.
   The French container shipping line, the world's third-biggest by fleet capacity, has struggled like other lines to cope with poor freight rates on key east/west trades as it also takes deliveries of new vessels.
   Reports have circulated for months that CMA CGM was actively renegotiating new vessel payments and delivery schedules. Last week, the line admitted it was renegotiating and even trying to cancel certain ship deliveries. It also said it was consulting with a consortium of its banks to work out a near-term finance plan to weather the current economic downturn.
   The Bloomberg report suggests debts are mounting at the French line — $5.6 billion according to unnamed sources with the line, which is not publicly traded. The report also said CMA CGM spent about two-thirds of its $1.8 billion in cash reserves on ship purchases in the first half of 2009.
   A financial spokesmen for CMA CGM said the line had no comment on the report.
   'The closely held company, based in Marseille, is in breach of the terms governing about $3.9 billion of its loans, according to two of the people,' the Bloomberg report said. 'CMA CGM, which has begun talks with banks about a restructuring, has asked the lenders to waive their claims.'
   The line is also reportedly in talks with the French government over an aid package similar to the one Hapag-Lloyd successfully sought from the German government. But the government has said in previous comments that CMA CGM would have to restructure its debt before it was eligible for government help.
   A turn toward outside equity investors would be a change of course for CMA CGM founder Jacques Saade, whose family controls 100 percent of the line. Through strategic acquisitions of niche carriers and organic growth, the line has grown into a major player over the last three decades. Since 2009, CMA CGM’s fleet has grown from 123,000 TEUs to 1.02 million TEUs, transforming from “a niche carrier outside of the top 10 to become the third-largest liner operator globally,” said maritime news service Alphaliner. The carrier has more than tripled its global market share in that time, to 7.6 percent, while its owned fleet has grown 850 percent, Alphaliner said.
   In the meantime, American Shipper has learned that CMA CGM's operating profits from 2008 were far greater than those posted in the annual Who's Making Money edition in July. The report aims to compare the operating profits of the top 20 publicly listed container lines in the world.
   Though CMA CGM is privately owned, it issues a financial update to press outlets each spring stating its net income and revenue from the previous year. It was noted in this year's Who's Making Money report that CMA CGM's stated income was net income and not operating income, but the operating income provides a truer comparison against other lines.
   In the report, CMA CGM had $124 million of net income in 2008, placing it sixth among lines examined. However, according to documents obtained by American Shipper, CMA CGM had $999 million in operating profits in 2008, an amount that would have placed it at the top of the list, ahead of Maersk Line.
   The financial information, obtained by American Shipper from French companies house, was only available at the end of July, far past the editorial deadline for our Who's Making Money report.