Sea Containers to sell Silja to clear books
Struggling Sea Containers Ltd. has agreed to sell its Baltic ferry subsidiary Silja to Estonian ferry operator Tallink for about $594 million in cash and shares.
The London-based container leasing and ferries company said it will use the money to repay about $510 million of related bank debt. The future of the company has been in doubt for some time, and it still has to file its 2005 Form 10-K annual report with the Securities and Exchange Commission.
Payment for Silja’s core business, excluding its three “legacy” vessels which are not employed on it’s main routes, will be made with 450 million euros ($570 million) in cash as well as 5 million ordinary shares in Tallink, worth $24 million as of June 9. As part of the agreement, Sea Containers cannot sell the shares without Tallink’s permission within 12 months of the completion of the Silja sale, which is expected to be finalized July 28.
“The disposal of Silja is an important stage in the company strategy of divesting of its ferry and sundry assets and paying down the high level of associated debt. This, combined with a substantial reduction in overheads, will form the basis of the company’s restructuring decisions in connection with its discussions with stakeholders over the coming weeks,” Sea Containers said in a statement.
In a related development, Sea Containers has agreed to pay $16.3 million to General Electric relating to a disputed services agreement concerning their container leasing joint venture GE SeaCo. Under the settlement agreement, Sea Containers will also pay GE Capital about $1.75 million for arbitration costs.