CSAV asks bank for help to weather storm
Chilean liner carrier CSAV has asked shipping bank HSH Nordbank how it can streamline its business as the global slump in demand imperils the line, Reuters reported Monday.
CSAV said Monday it had contacted the bank as shipping rates have sunk to unprofitable levels.
“The main tasks to be developed with the help of HSH Corporate Finance include evaluating the company’s different services, their profitability, short- and medium-term prospects and studying the convenience of the sale or disposal of non-essential assets,” the company said.
Selling assets might prove next to impossible in an environment where owned and chartered ships are being idled due to excess capacity. And rates aren’t likely to recover handsomely for some time. American Shipper and ComPairData analyst Francis Phillips touched on the issue of CSAV’s vulnerability in its January issue, noting that the line was being squeezed out of its home market by a decision by its former partners on European-South American services (January American Shipper, page 30 or online at AmericanShipper.com).
Lines like CMA CGM, Mediterranean Shipping Co. and Maersk Line operate large vessels and have more diverse trades from which to draw revenue, issues that make it harder to for CSAV to effectively weather the poor demand storm expected through much of 2009.
In the January report, American Shipper noted that Standard & Poor’s downgraded CSAV’s creditworthiness, saying it had a negative cash flow. The line lost $36.8 million in 2008, though shareholders injected $200 million in January to “bolster the company’s balance sheet,” Reuters reported. ' Eric Johnson