Eimskip sells half-stake in Euro Container Lines
Icelandic cold-carrier Eimskip said Friday it has agreed to sell the firm's 50 percent share in Euro Container Lines to Norwegian shipping firm Wilson ASA.
ECL, formed in 1999 as a joint partnership between Eimskip and Wilson, is a major dry bulk short sea carrier in Europe.
'The sale is a part of (Eimskip's) previously communicated strategy to decrease debt and focus on development of Eimskip’s core business. ECL has not been a part of Eimskip’s sailing system and the divestment will not impact its services,' said Gylfi Sigf'sson, Eimskip chief executive officer.
The sale comes as Eimskip faces what it called 'uncertainty' over capital financing as Iceland approaches a complete collapse of its national banking system.
The government of Iceland Friday seized control of the nation's largest bank, Kaupthing Bank hf. The Iceland government has taken over all three of the nation's banks after the firms collapsed following failed attempts to finance $61 billion of foreign debt. By comparison, the national economy of Iceland is about $5 billion.
Eimskip, which posted a third-quarter after-tax loss of about $27 million on revenues of $548 million, has been trying to sell off assets to lower debt and boost its equity ratio to above 25 percent.
In addition to the ECL deal, Eimskip is in the process of selling its Versacold Atlas subsidiary, which Eimskip purchased for $1 billion in 2006.
Eimskip also faces the possibility it may have to make payments on a $280 million loan made by Jointrace Ltd. to XL Leisure Group. Eimskip guaranteed the loan as part of its divestment of XL in 2006. Last month, XL was taken over by the Icelandic government and Eimskip said it may have to make the loan payments.
'A successful refinancing of XL is an important goal in our aim of removing the potential impact of previously made loan guarantees against Eimskip’s balance sheet and we hope, of course, that the XL refinancing will be completed successfully,' Sigf'sson said.
'However, at the same time we also want to point out that as with any such transaction there is no certainty and it may prove to be more difficult than expected. Even in such circumstances there is now a mechanism in place for significant, well-respected investors to then assume the loan obligation, which the board of Eimskip believes is very positive.'
Despite the economic turmoil facing Iceland, Sigf'sson said Eimskip's core cold-carrier and logistics services would remain unchanged and the firm is sound.
'The financial reorganization of the group continues, and the planned sales of assets continues. Eimskip's transport business is strong, the daily operations are ensured and Eimskip's services will remain unchanged,' Sigf'sson said.
In addition to serving Europe, Eimskip also services the U.S. East Coast.