Thursday, November 26, 2009

CMA CGM continues search for more money

I don't really know what's going on with CMA CGM. There appears to be some conflicting reports. The Journal of Commerce has an article saying private investors sat in on a meeting, but Lloyd's List reported this was incorrect.

The short story is they need money. Today, the number is $300-$400 Million.
Next month, who knows.

What I truly don't understand is this:

CMA CGM Chairman Jacques Saade said last week he wants outside investors to inject $300 million to $400 million into the carrier and hold stakes for five to seven years. Saade said the company faces a cash crunch because it must find $1.2 billion in upfront payments for container ships it ordered in Asia.

So, what? They sell shares in the company, but with an expiration date?

(** clarification** Yes, I do know this is possible. I just don't think it would be a good investment. Appears the French Government might be the one who will do this deal, which makes sense.)

The next 5-7 years will still be quite tough for the shipping industry. Normally the business cycles are very long, something like 20 years. I don't know what would entice an investor to accept such an arrangement, but then, no details have been made known.

This is what is being reported

CMA CGM, which began talks with its banks and the French finance ministry in late September, said it expects to reach agreement by mid-December, a month later than originally planned.

Mid-December is just around the corner.

I look for this to be pushed back some more.

click here for link to Journal of Commerce article.

No comments: