CMA CGM Won’t Get State Bailout

Financially-troubled CMA CGM will not get conventional state aid from the French Government, but the container line is still in talks with FSI, the country’s sovereign wealth fund, about new equity investment, its finance director told a conference in Hamburg Thursday.

Jean-Yves Schapiro also told the Marine Money conference efforts to bring in private equity investors, including Goldman Sachs and Texas Pacific Group, had failed, the Financial Times reported Friday.

A deal could not be reached because the investors were “too greedy,” the newspaper quoted Schapiro as saying. “They made offers that were unacceptable.”

CMA CGM, the world’s third-largest container shipping line, is also in talks with a steering committee of 13 creditor banks to renegotiate terms and payments on $5.6 billion in loans that it owes to 75 creditor banks.

The Marseille-based carrier’s creditor banks have agreed to provide $500 million in short-term credit to carry the struggling carrier through its current cash shortage. It has already received $80 million of those credits and expects to receive the rest by the end of March, Rodolphe Saadé, one of the carrier’s executive officers, told The Journal of Commerce in a recent interview.

“We [are trying] to persuade the French strategic investment fund,” Schapiro said, referring to the state’s $27 billion FSI fund. “This is what we spend our days, our weeks, our months doing. We are trying to persuade them that it’s a wonderful opportunity to be part of CMA CGM.”

CMA CGM is also in negotiations with South Korean shipyards to cancel or delay orders for about 30 vessels it ordered during the boom years leading up to 2007 when shortages of vessel capacity appeared to be the biggest problems facing container lines. But the global recession and the decline in European and U.S. demand for imported consumer goods caused freight rates to plunge on the major east-west trade routes, undermining the French carriers’ ability to pay for the ships it ordered.

Schapiro hit out at the level of state support available to other container lines, the Financial Times reported.

He said China’s state-owned lines were losing more for each container shipped than CMA CGM but had the state and Bank of China behind them. He said Hamburg-based Hapag-Lloyd has been granted federal and local state guarantees for its loans. “It’s very unlucky for CMA CGM that Marseilles is not as wealthy as Hamburg,” he said.