Will fewer vessels be scrapped?

Because of the value of the Indian Rupee, the incentive to scrap ships has declined.

This from Hellenic Shipping News

Oversupply pressures both in the dry bulk and the tanker markets, as well as in the container business are calling for a much slower newbuilding ordering activity during 2012. An additional factor expected to put pressure on shipyards is the lack of financing for many companies, especially those operating from the European continent. Meanwhile, as the year draws to a close, it’s worth noting that during the past week, the newbuilding pace was once again very slow, especially in the dry bulk and tanker markets.
According to the latest report from Piraeus-based shipbroker Golden Destiny, “Hyundai Heavy Industries announced that it signed a $900 million order to provide offshore platforms and other facilities off the coast of Africa. Under the deal, Hyundai Heavy Industries will build two offshore gas platforms in Nigeria by the end of 2014. In addition, Israel Land Development Company Energy is said to have signed an agreement of cooperation and development with DSME E&E, an energy related subsidiary of South Korea’s Daewoo Shipbuilding and Marine Engineering for the construction of a floating LNG facility at the Myra and Sarah has fields’ offshore Israel” said Golden Destiny.
The shipbroker also noted that overall, the week closed with 18 fresh orders reported worldwide at a total deadweight of 454,600 tons, posting a 49 % week-onweek decline, standing at similar weekly levels of 2010, when 17 orders had been reported worldwide with 7 newbuilding transactions in the bulk carrier segment. In terms of invested capital, the total amount of money invested is estimated at region more than $656 mil with 72% of the total number of orders being reported at an undisclosed contract price.
“In the bulk carrier segment, Safe Bulkers of Greece is said to have placed a panamax order of 74,500 dwt in an undisclosed Japanese yard for delivery in 2014. In the handysize segment, Belgian shipowner, Bocimar N.V. has placed an order for six plus 36,000dwt units in Weihai Samjin of China, plus an option for four more units, with delivery in 2013-2014.
In the offshore segment, notable order of this week has been the placement for the construction of an accommodation semisubmersible rig by the world’s largest owner and operator of accommodation and service rigs, Prosafe. The unit will be built by Jurong Shipyard, subsidiary of Singapore rig builder Sembcorp Marine at a cost of $291,6 mil for delivery in 2q 2014, with an option for another two units” concluded the shipbroker’s report.
In a separate note on the demolition market, Golden Destiny said that “the weak Indian rupee against the US dollar has dropped scrap levels at the lowest point for this year. India offers $450/ldt for dry/general cargo, same levels of the end 2010, with Pakistan being in the first rankings and China trying to compete at levels xs $400/ldt. In the wet market, levels remain below $500/ldt with Pakistan paying $480/ldt, but with lack of success as no units were secured. In Bangladesh, the market remains closed till the next court hearing on January 12th with mixed feelings for a reopening of the industry earlier than the end of January. What is noteworthy are market rumors suggesting the disposal of one more double hull VLCC built 1994 from BW group following the example of Mitsui OSK Lines. In the dry market, one more capesize of 173,028dwt built 1984 reported for scrap in India at $475/ldt, bringing the tally of capesize units reported for scrap this year at more than 20 units, whereas in 2010 only 3 capesize vessels had been reported for scrap.

The Fight is On

All containership carriers are losing money.

Maersk stated they would not lose market share, which we can guess only means
they won't be pushing to raise rates.

So the other carriers are getting together and forming joint services (Vessel Sharing Agreements, VSA's), to at least save some money.

The latest one is Hamburg Süd and MSC

Here is the press release from Hamburg Süd

Hamburg Süd and MSC fuse Mediterranean – South America East Coast Services



Hamburg, 22 December 2011. In view of continuous poor trading conditions and replacing its current service set up, effective from mid January 2012 Hamburg Süd and MSC will restructure their services between the Mediterranean and South America East Coast. The two currently separate services will be fused into one common service that will be operated by eight vessels of 5,900 TEU nominal capacity. Of those, Hamburg Süd is to provide initially one vessel and MSC seven vessels.



The new port rotation will be as follows: Valencia – Gioia Tauro – Livorno – Genoa – Fos – Barcelona – Valencia – Suape – Rio de Janeiro – Santos – Buenos Aires – Montevideo –Rio Grande – Navegantes – Itapoá – Santos – Rio de Janeiro – Suape – Tangier – Valencia.



The new service allows for more comprehensive port coverage in South America and connects to the Hamburg Süd network to Eastern Mediterranean and Middle East destinations via the hub port Tangier.

Moody downgrades Hapag-Lloyd

Moody's has downgraded the outlook for Hapag-Lloyd. This should come as no
surprise, considering how bad the results have been for all container carriers.

I rather doubt TUI will find anyone to buy the rest of their stake in this
company.

At least, not for what they are asking.

From The Journal of Commerce

Moody’s has changed its outlook for Hapag-Lloyd to “negative” from “stable” after the German carrier had a “weaker than expected performance” during the first three quarters of 2011.

The downgrade of Hapag-Lloyd’s outlook comes as TUI attempts to sell its 49 percent stake in the company. Standard and Poor’s in September downgraded the company’s outlook from “stable to negative,” citing lower than expected first-half year profitability.

Hapag-Lloyd has been one of the few container lines to stay in the black over the last three quarters. A $54.5 million profit total in the last two quarters offset a $31.8 million loss in the first quarter.

Moody’s said the container shipping industry has performed poorly because an oversupply of capacity has forced carriers to pull down rates. The rating’s agency said the highly competitive industry would be further challenged as new capacity is deployed next year.

“These factors have exerted pressure on operators to expand their market shares, making it difficult for the companies in the sector, including HL, to pass on material cost increases, despite good traffic volumes,” Moody’s said.

The ratings agency said Hapag-Llody has a strong business model featuring solid market shares and a flexible cost base. Moody’s said the company’s liquidity profile is adequate, with all of Hagag-Lloyd's new shipbuilding scheduled for delivery over next two years fully financed.

The ratings agency reaffirmed Hapag-Lloyd’s B1 corporate family rating and probability of default rating. Moody’s also reaffirmed the company’s B3 unsecured rating assigned to the $629.7 million and $250 million worth of senior unsecured notes maturing in 2015 and 2017, respectively.

Increased Tonnage Europe/U.S.

I don't really know why carriers would add tonnage at this time, but they are.

This is a press release.

Hamburg Süd and partners to upgrade Transatlantic Service



Hamburg, 19 December. In collaboration with Hamburg Süd and ZIM, Grand Alliance members Hapag-Lloyd, NYK and OOCL have decided to upgrade their tonnage deployed in the Transatlantic Service between Europe and North America East Coast. As from March 2012 instead of four 3,700 TEU vessels, four 5,400 TEU ships are then to come into operation. As hitherto, Hamburg Süd and ZIM will each provide one vessel and Grand Alliance two.



The weekly fixed-day service continues to have the port rotation: Rotterdam – Hamburg – Le Havre – Southampton – New York – Norfolk – Charleston – Rotterdam

More reports on NY/NJ Waterfront arrests

Below is from New Jersey Star Ledger. They are doing a great job
covering the arrests related to corruption on the NY/NJ piers.

Ex-longshoremen's union official is indicted on waterfront corruption charges
Published: Thursday, December 16, 2010, 7:40 AM

A new indictment of a once-powerful longshoremen’s union leader was quietly unsealed this week, pointing to a growing offensive by federal prosecutors into corruption on the waterfront.

The charges come less than a week after another member of the same union was charged with collecting "Christmas tribute" money exacted from other dockworkers to kick back to the mob.

Albert Cernadas Sr., who served as both executive vice president of the International Longshoremen’s Association and president of ILA Local 1235 in Newark, was accused of shaking down his members under threats of violence, in what was described as a long-running racketeering operation tied to the Genovese organized crime family.

The charges come nearly five years after Cernadas, 75, of Union Township, was removed from the ILA after pleading guilty to corruption charges involving thousands of dollars in union funds being funneled into a pharmaceutical company controlled by organized crime.

But in the new indictment, the government charges a far larger conspiracy dating back more than two decades — alleging that Cernadas put the screws to force cash payments from his members every year around Christmastime by use of "actual and threatened force, violence and fear."

The 52-page indictment, unsealed in federal court in Newark, does not say where the money went, but prosecutors say Cernadas was a known associate of the Genovese family which controlled the New Jersey waterfront. At the same time, other documents recently filed in several related cases spelled out what appeared to be a lucrative extortion racket known as "Christmas tributes" that preyed on ILA members, forcing them to cede part of their pay each year to crime bosses with hooks into the union.

Cernadas’ attorney, Jack Arseneault, declined comment. The U.S. Attorney’s office in Newark also declined to comment, and would not say what sparked its interest in Cernadas or why it kept the charges low key, opting not to make an announcement as it frequently does in such cases.

However, the indictment and other recent criminal complaints suggest a far larger investigation.

Last week, Robert Ruiz, 51, an international representative and delegate of the ILA, was arrested and charged in New York with extortion conspiracy in connection with similar payments.

According to an affidavit filed in the case by Jonathan Mellone, a special agent for the U.S. Department of Labor, members of the ILA were required to provide payments every December, and the payments were then kicked back to the Genovese family.

In connection with that case, the FBI said it dug up nearly $52,000 in cash buried in the backyard of one unidentified union member from New Jersey who went to authorities and said he and others were threatened with the loss of their jobs or their lives if they did not pay up. The union member told authorities the money was to go to Ruiz and it was their understanding the envelopes ultimately went to members of the Genovese family.

Separately, another reputed mobster, Stephen Depiro, was indicted in New York in April on racketeering charges in connection with the waterfront, with court records similarly documenting the holiday payments to organized crime.

In the criminal complaint filed against Depiro, transcripts of phone calls referred to the annual Christmas payments. Investigators said Edward Aulisi, the son of Vincent Aulisi, who became president of Local 1235 after Cernadas left, was caught on tape assuring reputed mob boss Michael Coppola that the tribute money would continue even after Cernadas left, and in fact had doubled.

The payments were the focus of some attention during a special hearing in October by the Waterfront Commission of New York Harbor. Aulisi, whom officials say held a no-show job at Port Elizabeth, was called as a witness but invoked his Fifth Amendment right against self-incrimination. He has not been charged with any wrongdoing.

The indictment against Cernadas says only that he conspired to extort money from ILA members each December, beginning in 1982. The timing of the charges suggest prosecutors were facing a problem with the statute of limitations had they not filed the when they did.

ILA officials in New York said Wednesday Cernadas was no longer with the union and they were unaware of the indictment.

Cernadas, whose son is Al Cernadas Jr., the first assistant prosecutor of Union County, was arraigned Wednesday before U.S. District Judge Susan D. Wigenton in Newark and released on a $1 million bond.

click here for link

More arrests on the NY/NJ waterfront

From The NY/NJ Waterfront Commission web-site

Three New Defendants and Multiple Counts Added to Genovese – ILA Racketeering Indictment.

December 15, 2011

NEWARK, N.J. – Three additional defendants were arrested today and charged in a superseding indictment that adds dozens of counts to a previous indictment charging multiple defendants – including an alleged member and associates of the Genovese organized crime family – with racketeering and related offenses, New Jersey U.S. Attorney Paul J. Fishman and Eastern District of New York U.S. Attorney Loretta E. Lynch announced.

A 103-count superseding indictment was unsealed this morning in Newark federal court in which previously-charged defendants Stephen Depiro, a soldier in the Genovese organized crime family of La Cosa Nostra (the “Genovese family”), and three Genovese family associates – Albert Cernadas, former President of International Longshoremen’s Association (“ILA”) Local 1235 and former ILA Executive Vice President; Nunzio LaGrasso, the Vice President of ILA Local 1478 and ILA Representative; and Richard Dehmer – are charged with racketeering conspiracy, including predicate acts of conspiring to extort Christmastime tributes from ILA members on the New Jersey piers. The superseding indictment includes, as part of the racketeering conspiracy charge, 61 additional predicate acts of extortion of various ILA members by Cernadas and 12 additional predicate acts of extortion of ILA members by Nunzio LaGrasso. In addition to the Christmastime extortion scheme, LaGrasso is charged with the extortion of an ILA dock worker so that the worker could retain a supervisory job at the port.

The superseding indictment also charges newly added defendants Michael Nicolosi, Julio Porrao and Rocco Ferrandino – all current or former ILA supervisors – with extortion conspiracy and extortion. Nunzio LaGrasso and five other defendants, including Thomas Leonardis, the President of ILA Local 1235 and ILA Representative; Robert Ruiz, the Delegate of ILA Local 1235 and ILA Representative; and Vincent Aulisi, former President of ILA Local 1235, are charged with additional counts of extortion of ILA members. Ruiz is also charged with obstructing justice by impeding a grand jury investigation. In total, the superseding indictment contains allegations regarding the extortion of 28 victims.

The government is represented by Assistant U.S. Attorneys Jacquelyn M. Kasulis and Jack Dennehy of the U.S. Attorney’s Office, Eastern District of New York, and Assistant U.S. Attorney Anthony Mahajan, of the U.S. Attorney’s Office, District of New Jersey.

And...this one

PNCT General Foreman Suspended by Commission after Arrest and Indictment on Multiple Extortion Charges.

December 15, 2011

PNCT General Foreman Michael Nicolosi was arrested this morning after being indicted federally on extortion conspiracy and multiple counts of extortion involving the forced collection of Christmas tributes from ILA members to the Genovese Family.

His license as a longshoreman was suspended by Commission vote pending an administrative hearing on the charges.

CSAV looking for money, plans to streamline

News from Chile (click here for link)


As best I can make out, CSAV plans to attempt to raise money from a "road show", I guess trying to get hedge funds and who knows else to either loan them money, or get shares. I can't be certain.

The plan is to actually downsize and streamline the company to make it profitable in 2012, and I guess raise capital to keep it going until the business improves.

Who knows, there is a lot of money out there looking for a decent return. Maybe someone will take a gamble.

I have quoted the spanish article, and below it is an english translation.

Oscar Hasbún: "Este aumento de capital no está dirigido sólo a los accionistas de CSAV"
La empresa realizará un road show en Brasil, EEUU y Europa, asesorada por BTG Pactual.

El ejecutivo asegura que hacia mediados de 2012 ya no serán el peor actor de la industria.
por Sandra Novoa F.

La Compañía SudAmericana de Vapores fijó ayer en US$ 0,2045 ($ 104 al dólar observado del día) el precio de la acción para el aumento de capital por US$ 1.200 millones. Aplicó un descuento de 10% respecto del precio promedio del miércoles y 21% respecto del promedio de octubre-noviembre (la acción ha caído 80% en el año). Este aumento de capital -5.867.970.660 nuevas acciones- es parte de la reestructuración iniciada en mayo, después que ingresara el grupo Luksic a la propiedad -a través de Quiñenco- y tomara las riendas de la administración.

Oscar Hasbún, gerente general Naviero-Contenedores, y quien ha estado a cargo del proceso, afirma que "es un precio atractivo para que los accionistas actuales suscriban lo que sus prorratas les permiten y para cualquier potencial inversionista". Explica que el descuento considera la volatilidad de la Bolsa y del tipo de cambio, y que fijaron el precio en dólares para asegurar la recaudación de los US$ 1.100 millones que gatillan la división de la empresa y la constitución de Sociedad Matriz Saam.

La opción preferente parte el 19 de diciembre y cierra el 17 de enero. Así, el proceso completo debiera concluir a más tardar la primera semana de febrero y la acción de SM Saam estaría flotando en la Bolsa durante febrero.

¿Cómo será la dinámica del road show?

Este aumento de capital no está dirigido sólo a los accionistas de CSAV. Cuando termine la opción preferente ofreceremos el remanente a terceros tanto en mercado nacional, con ayuda de Celfin, como en el internacional, asesorados por BTG Pactual. Contemplamos reunirnos con fondos de inversión en Brasil, Europa y Estados Unidos.

¿Están previendo que en la opción preferente no habrá mucha acogida?

Creemos que dado el tamaño del aumento de capital y lo atractivo de ofrecer dos acciones -Saam y CSAV- es una buena opción abrir la colocación al mercado. Mejora las posibilidades de éxito y permite el ingreso de nuevos accionistas.

¿Tienen una estimación de cuánto se pondría en la opción preferente?

Es difícil predecir. Será muy relevante lo que pase con las AFP. Creemos que es una opción muy atractiva para los inversionistas institucionales en general, por cuanto retirarían acciones de Saam, que tiene un negocio estable, con crecimiento, infraestructura y baja deuda.

¿Han sondeado el interés del mercado?

Al día de hoy, dada la situación de la industria y los resultados a septiembre de CSAV, existe preocupación en el mercado, pero durante el road show explicaremos en detalle por qué ésta es una buena opción, el impacto concreto de la reestructuración, que ésta es una compañía distinta a la que tomamos; explicaremos por qué Saam tiene un valor significativo y un enorme potencial y por qué creemos que la industria tocó fondo y ahora viene una reversión del ciclo naviero.

¿El gran incentivo para ir al aumento de capital es que al menos saldrán ras, porque sus acciones de Saam valen el equivalente al capital desembolsado, e incluso más?

Primero, el aumento de capital es una invitación a una CSAV distinta, más chica, más asociada, líder en sus mercados y con 30% de flota propia, un récord en su historia. Segundo, en un contexto en que la industria tocó fondo, por tanto es una oportunidad para invertir. Tercero, por supuesto que el atractivo tiene que ver con que los accionistas actuales, que concurran en su prorrata, recibirán al final de la operación dos acciones y una parte sustancial de la plata que pongan, si no toda, la recibirán en papeles de Saam, que posee un alto potencial de crecimiento como empresa independiente.

Saam tiene tres áreas: terminales portuarios, remolcadores y logística. Opera en muchos países, pero no en todos ellos con sus tres negocios. Una estrategia de crecimiento evidente es estar con las tres en todos los mercados.

¿Cómo se lee la valorización del área remolcadores de Saam en US$ 520 millones?

Está por sobre el valor que estimábamos para el área y consolida los fundamentos del valor de Saam. Su asociación con la holandesa SMIT fortalece sus operaciones en toda América y presenta oportunidades importantes de crecimiento en mercados como Brasil.

¿Cuán visibles son los frutos de la reformulación de CSAV?

La última línea al tercer trimestre dice poco de lo que está pasando. Nuestro negocio ha estado siempre afectado por el rubro de portacontenedores, el más volátil y más grande. Ahí entre abril y agosto perdimos un promedio de US$ 129 millones, mientras que en septiembre -primer mes donde se puede ver la reestructuración de manera efectiva contablemente- la pérdida cayó 64% respecto del promedio de ese período. Son US$ 800 millones menos al año.

En los resultados hay costos de reestructuración, efectos de tipo de cambio y otros que no son propios de la operación, sino de la solución que hemos implementado: a septiembre pagamos US$ 45 millones en costos de reestructuración y tendremos mucha de esa resaca en el último trimestre y el próximo año. Pero en la operación pura, la mejora es significativa en un mercado que está peor.

A septiembre los resultados de todas las compañías son más malos que los seis meses anteriores. CSAV es la única que tiene una mejora significativa en contenedores. Esto muestra que estamos construyendo una compañía capaz de competir en el negocio. La meta es que la estructura de costos nos permita estar entre los primeros que ganen plata cuando las cosas mejoren.

¿Cuándo estará en régimen la reestructuración?

Full en el segundo trimestre, ahí será visible la empresa nueva. Para tener utilidades dependeremos de que la industria mejore, pero ya no seremos el peor actor de la industria.

¿Qué tanto más chica será CSAV respecto de su peak?

En capacidad de carga será 47% menor respecto del peak de mayo de 2011. La capacidad de venta caerá mucho menos, porque estamos achicando una fábrica con mucha capacidad ociosa. Estimamos que en 2012 venderemos 30% menos de volumen transportado que en 2011; en plata, dependerá del precio.

¿Cuándo la industria permitiría ganar plata?

En este rubro los precios pueden variar hasta 10% a la semana. Nuestra percepción es que el tercer trimestre fue muy malo y el cuarto será peor. La mayoría de las compañías tienen problemas de capitalización, alto endeudamiento y poca caja. No resisten otro semestre malo. Por tanto, creemos que vienen más anuncios de alianzas como la de MSC-CMA en un montón de rutas y eso significa achicarse y sacar barcos. Nosotros ya lo hicimos: paramos 1% de la flota mundial. Maersk, la número 1, también dijo hace unas semanas que reducirá su capacidad. Y los tres actores principales anunciaron alzas de precios de US$ 600, 40%, a partir del 15 de diciembre en casi todos los tráficos, no porque haya más demanda, sino porque no pueden seguir perdiendo.

En enero CSAV tenía 170 barcos y hoy 119, de los cuales operamos 85 y el resto los subarrendamos; eso mismo hará el resto de los actores. Hoy el arriendo vale US$ 8.000 cualquiera sea el tamaño; 5 meses atrás una nave de 5.000 TEU costaba US$ 35.000. Con este escenario, en 2012 vemos un primer trimestre difícil, un segundo algo mejor y un segundo semestre en equilibrio, retornando a niveles normales de rentabilidad.
Recuadro :

"No estamos apostando las fichas al socio estratégico"

-¿Es factible que el socio se incorpore en el aumento de capital?

No. Un socio estratégico, que aporte conocimiento y sinergias, tiene más que ver con una fusión.

-¿Y en qué está la búsqueda del socio estratégico? ¿Se concretará después del aumento de capital?

Hoy nuestro principal foco está en hacer de CSAV una empresa rentable por sí sola. No estamos apostando las fichas al socio estratégico, no es una obsesión, porque tenemos que preocuparnos de la marcha de la compañía.

El socio puede venir o no. Es una opción atractiva que se puede dar en un minuto, pero el foco es consolidar el modelo de negocios de CSAV, y a eso estamos abocados. Y la reestructuración está dando resultado; si bien en términos comparativos hoy estamos muy mal respecto de nuestros competidores, en seis meses estaremos comparativamente mejor. El tiempo nos juega a favor, porque la industria está empeorando.

En la industria habrá consolidación por diversas vías, como acuerdos de operación conjunta de mediano y largo plazo, que es lo que hemos hecho hasta ahora (en cinco meses aumentamos nuestras operaciones conjuntas desde menos del 30% a más de 85%). La semana pasada salió un anuncio de MSC y CMA, segundo y tercer operadores del mundo, declarando su intención de abordar conjuntamente varios mercados; esa es una forma de consolidación en el hecho. En este contexto nosotros tenemos una condición bastante única en el mercado, porque somos fuertes en las rutas Norte-Sur -que crecen a tasas más altas que el resto-, en un mercado que es fuerte en rutas Este-Oeste. Por tanto, somo atractivos, porque ofrecemos complementariedad.

¿En qué plazo definirían el socio?

Hoy la industria está muy complicada, cada empresa tiene que hacer sus ajustes y para nosotros es fundamental mostrar los resultados de la reestructuración, tener una compañía con retornos similares a los de la industria y no peores. Nunca dijimos que incorporar un socio era inminente, sino que había una decisión de trabajar en la búsqueda de un socio estratégico, y eso sigue en pie.

¿Para cuánto les alcanza con este aumento de capital navegando solos?

Con esto la compañía tiene recursos suficientes para desarrollar sus planes. No creemos que vayamos a necesitar capital para financiar pérdidas.

This is translated into english using Google Translate. It does leave something to be desired.

Hasbún Oscar: "This capital increase is intended only for shareholders CSAV"
The company will hold a road show in Brazil, USA and Europe, advised by BTG Pactual.

The executive said that by mid 2012 and will not be the worst actor in the industry.

The South American Steamship Company yesterday set at U.S. $ 0.2045 ($ 104 dollar a day observed) the share price for the capital increase of U.S. $ 1,200 million. He applied a discount of 10% over Wednesday's average price and 21% on average from October to November (the stock has fallen 80% in the year). This increase in capital 5,867,970,660 new shares, is part of the restructuring begun in May, after you enter the Luksic group property Quiñenco-through, and take the reins of government.

Oscar Hasbún, general manager Naviero-Containers, and who has been in charge of the process, says "it is an attractive price to existing shareholders pro rata sign them what their permit and for any potential investor." He explained that the discount considers the volatility of the stock market and exchange rate, and set the price in dollars to ensure the collection of U.S. $ 1,100 million that trigger the division of the company and the parent company constitution Saam.

The preferred option part of the December 19 and closes on 17 January. Thus, the entire process should be concluded by the first week of February and Saam SM action would be floating on the Stock Exchange in February.

How will the dynamics of the road show?

This capital increase is not directed only to the shareholders of CSAV. When you finish the preferred option to offer the remaining third both in domestic market, with the help of Celfin, and internationally, advised by BTG Pactual. We watched together with investment funds in Brazil, Europe and USA.
Are you anticipating that there will be the preferred option well received?

We believe that given the size of the capital increase and the attractiveness of offering two action-Saam and CSAV, is a good choice to open the placing on the market. Improves the chances of success and allows the entry of new shareholders.

Do you have an estimate of how much would the preferred option?

It is difficult to predict. It will be very important what happens to the AFP. We believe it is a very attractive option for institutional investors in general, as Saam withdraw shares, which has a stable business, with growth, infrastructure and low debt.

Have you probed the market's interest?

To date, given the state of the industry and results CSAV September, there is concern in the market, but during the road show will explain in detail why this is a good option, the actual impact of the restructuring, it is a different company that we take, we will explain why Saam has significant value and huge potential and why we believe the industry hit bottom and now comes a reversal of the shipping cycle.

Is the great incentive to go to the capital increase is that at least will flush, because their shares are worth the equivalent Saam invested capital, and even more?

First, the increase of capital is an invitation to a different CSAV, smallest, most associated, the leader in its markets and its own fleet 30%, a record in its history. Second, in a context in which the industry bottomed out, so it is an investment opportunity. Third, assume that the appeal has to do with existing shareholders, who concur in its proportion, received at the end of the operation two actions and a substantial portion of the money they bring, if not all, Saam papers received in , which has a high potential for growth as an independent company.

Saam has three areas: port terminals, tugs and logistics. Operates in many countries, but not all of them with their three businesses. A clear growth strategy is to be with the three in all markets.

How to Read the recovery area Saam tugs at U.S. $ 520 million?

Is above the value we estimated for the area and strengthens the foundations of the value of Saam. His association with the Dutch SMIT strengthens its operations in America and presents significant opportunities for growth in markets like Brazil.

How visible are the fruits of the reformulation of CSAV?

The last line in the third quarter says little about what is happening. Our business has always been affected by the containership category, the most volatile and larger. Between April and August there lost an average of U.S. $ 129 million, while in September, the first month where you can see how effective the restructuring of accounting, the loss fell 64% from the average for that period. Are $ 800 million less per year.
n the results no restructuring costs, exchange rate effects and others that are not part of the operation, but the solution we have implemented: a September pay $ 45 million in restructuring costs and have a lot of that surf on the last quarter and next year. But in the pure operation, the improvement is significant in a market that is worse.

In September the results of all the companies are more evil than the previous six months. CSAV is the only one with a significant improvement in containers. This shows that we are building a company capable of competing in the business. The goal is that the cost structure allows us to be among the first to earn money when things improve.

When the restructuring scheme will be?

Full in the second quarter, there will be visible new company. For profit that the industry will rely on better, but we will not be the worst actor in the industry.

How much smaller will CSAV about their peak?

Cargo capacity is 47% lower than the peak in May 2011. The sales capacity will fall much less, because we are a factory with much shrinking spare capacity. We estimate that in 2012, selling 30% less volume transported in 2011, in silver, depend on the price.
When the industry would save money?

In this area prices can vary up to 10% per week. Our perception is that the third quarter was very bad and the quarter will be worse. Most companies have capitalization problems, high debt and little cash. Do not resist another half bad. Therefore, we believe that partnerships are more ads like MSC, CMA in a lot of routes and that means shrink and make boats. We already did: stop 1% of the world fleet. Maersk, No. 1, also said a few weeks ago to reduce its capacity. And the three major players announced price increases of U.S. $ 600, 40%, from December 15 in almost all traffic, not because there is more demand, but because they can not keep losing.

CSAV in January and now had 170 ships, 119 of which operate 85 and the rest are leased out, that it will do the rest of the actors. Today the rental costs U.S. $ 8,000 regardless of size, 5 months ago a ship of 5,000 TEU cost $ 35,000. With this scenario, in 2012 we see a difficult first quarter, a second and a better second half in balance, returning to normal levels of profitability.
Box:

"We're not betting the chips to the strategic partner"

- Is it possible that the member is incorporated in raising capital?

No. A strategic partner to provide expertise and synergies, has more to do with a merger.

- And what is the search for strategic partner? Do materialize after the capital increase?
Today our main focus is on making a profitable company CSAV alone. We're not betting the chips to the strategic partner, not an obsession, because we have to worry about the running of the company.

The partner can come or not. It is an attractive option that can be given in a minute, but the focus is to strengthen the business model CSAV, and that we are doomed. And the restructuring is paying off, but today we are comparatively very bad about our competitors, in six months we will be comparatively better. The time we play for, because the industry is getting worse.

In the industry will consolidate a number of ways, including joint operating agreements and long term, which is what we've done so far (in five months we increased our joint operations from less than 30% to over 85%). Last week came an announcement of MSC and CMA, second and third operators in the world, declaring their intention to jointly address several markets, that's a form of consolidation in the event. In this context we have a rather unique status in the market, because we are strong in the North-South routes that grow at higher rates than the rest, in a market that is strong in the East-West routes. Therefore, somo attractive, because we offer complementary.

How soon would define the partner?

Today the industry is very complicated, each company has to make adjustments and to us it is essential to show the results of the restructuring, have a company with similar returns to the industry and not worse. We never said to incorporate a partner was imminent, but had a decision to work towards finding a strategic partner, and that still stands.

For how they achieved with this capital increase sailing alone?
With this the company has sufficient resources to develop their plans. We do not believe that we will need capital to finance losses.

On The Waterfront

Things haven't changed much on the NY/NJ Piers.

The only difference is now the Waterfront Commission is reporting some of
the problems.

Here are the last few press releases.

WCNYH

Pier Superintendant Arrested and Charged with Managing an Illegal Bookmaking Operation.

December 9, 2011

Maher Terminal Pier Superintendant Joseph Joel DiCosta was arrested this morning by Waterfront Commission detectives and agents from the US Department of Labor on a federal complaint charging him with managing an illegal gambling business in violation of Title 18 USC Section 1955. The complaint charges that DiCosta ran the illegal bookmaking operation from January 2003 to January 2011 utilizing both internet sites and 1-800 telephone numbers.

The criminal case is being prosecuted by the United States Attorney's Office for the Eastern District of New York.

DiCosta's license as a Pier Superintendant was suspended by the Commission this afternoon pending an Administrative Hearing on the charges.

WCNYH

Genovese Soldier and Checker Plead Guilty in Port Loan Sharking Case.

October 28, 2011

Genovese Soldier Joseph Queli and Checker Nicholas Bergamotto pleaded guilty today before Superior Court Judge Anthony J. Mellaci, Jr. in Monmouth County, New Jersey.

Queli pleaded guilty to Conspiracy to Commit Criminal Usury (loan sharking) and Money Laundering as well as Filing False Tax Returns. Under the plea agreement, Queli will be sentenced to seven years in state prison.

Bergamotto pleaded guilty to Money Laundering and will be sentenced to a term of probation. Bergamotto has been suspended from the Waterfront since his arrest on April 22, 2010. Both Bergamotto and Queli were highlighted in the Commission’s Public Hearings held last year.

The indictment was the result of an on-going investigation by the Waterfront Commission and the New Jersey Attorney General’s Division of Criminal Justice into organized crime in the Port.

WCNYH

ILA Local 1 Trustee and Shop Steward Removed from Waterfront for Theft, Frauds, and Association with Organized Crime

October 25, 2011

By Commission Order, dated October 25, 2011, William A. Vitale, a suspended shop steward at Maher Terminals and a trustee of ILA Local 1, was removed from working on the Waterfront for the theft of $96,582.75 from Maher Terminals, committing frauds in connection with a sworn interview conducted by the Commission, and associating with an associate of the Genovese Crime Family.

On April 28, 2011, in Union County Superior Court, Vitale pleaded guilty to theft by deception (a crime of the 3rd degree). On September 23, 2011, the Court sentenced Vitale to three (3) years probation and ordered him to pay restitution of $96,582.75 to Maher Terminals, forfeit his Waterfront registration, and resign his position with the ILA. Vitale admitted that he lied and caused false time records to be created which resulted in Maher Terminals paying him for hours that he did not work. He also testified falsely during a sworn Commission interview in response to questions concerning his presence in Florida, California, and Aruba, when he was paid for working at the terminal. Vitale also visited in prison Joseph Lore, an associate of the Genovese Crime Family on the ILA Ethical Practices Counsel’s Barred List, who was convicted of charges pertaining to embezzlement from ILA Local 1588 and using intimidation or force against a witness. Both Vitale and Lore were subjects of testimony during the Commission's 2010 Public Hearings pertaining to "no show" jobs and organized crime associations on the waterfront.

The case was investigated by the Waterfront Commission and prosecuted by the New Jersey Attorney General's Division of Criminal Justice.

WCNYH

Longshoreman suspended by Commission after being arrested for bookmaking on behalf of the Gambino Family

October 20, 2011

Longshoreman Michael Bolger and ten others have been arrested and indicted on charges of Enterprise Corruption, Promoting Gambling in the First Degree, and Conspiracy in the Fifth Degree. The charges allege that Bolger and his co-defendants operated an illegal gambling ring on behalf http://www.blogger.com/img/blank.gifof the Gambino Crime Family in parts of New York and New Jersey from 2010 to 2011. Bolger has been suspended by the Commission pending an administrative hearing to determine whether his registration as a longshoreman should be revoked. The Organized Crime Task Force of the Office of the New York State Attorney General is prosecuting the case.

click here for link to Waterfront Commission web-site

New Vessel Sharing Agreement - Asia/S. Africa/E.Coast S. America

As can be expected when times get tough, the carriers ban together in Vessel Sharing
Agreements. This allows each to continue service, but with less vessels.

This is what transpired in the 1990's, before there were a bunch of container carriers who finally went bust.

Below is the press release from Hamburg-Sud. There are 5 companies joining together. Hamburg Süd, Maersk, CMA-CGM, CSAV, and CSCL (China Shipping). There is no mention of MSC, who just announced a huge agreement with CMA CGM, so not sure if they will get slots on this service or not.

Dec. 8, 2011


Asia – South Africa/South America East Coast

Hamburg Süd/Maersk Line and CMA-CGM/CSAV/CSCL

Winter Season Restructuring



Hamburg, 8 December 20011. In an effort to balance supply and demand during the forthcoming traditional period of weaker demand, Hamburg Süd and Maersk Line on the one hand and CMA-CGM, CSAV and CSCL on the other, have reached an agreement to combine their services between Asia, South Africa and the East Coast of South America as from December 2011.



Each Group is currently operating two weekly services in the trade. For the period from December 2011 through May 2012, the existing ASAS/NGX Sling 2 service will be merged with the existing ASAX/SEAS Sling 2 service. The current capacity deployed by the carriers in the ASAS/NGX Sling 1 service and ASAX/SEAS Sling 1 service will remain unchanged and independent.



Consequently, the new structure will be as follows:

ASAS/NGX 1: 11 x 7,100 – 7,450 TEU vessels

Participating carriers: Hamburg Süd and Maersk Line



ASAX/SEAS 1: 11 x 6,500 TEU vessels

Participating carriers: CMA-CGM, CSAV, CSCL



New Joint Service: 11 x 4,200 – 4,600 TEU vessels

Participating Carriers: CMA-CGM, CSAV, CSCL, Hamburg Süd, and Maersk Line

Schedule: Shanghai – Ningbo – Nansha – Hong Kong – Chiwan – Tanjung Pelepas – Singapore – Durban – Rio de Janeiro – Santos – Paranagua – Itajai – Santos – Port Elizabeth – Durban – Singapore – Hong Kong – Shanghai



Starting vessel for this New Joint Service will be MV Cap Jackson – Shanghai – December 16th.



The above changes will ensure adequate coverage of- and competitive transit times for the Asia, South Africa and East Coast South America market, both Eastbound and Westbound.

Investor Lawsuit against Dryship

I haven't followed Dryship for some time. As I wrote previously, in my opinion
this stock was manipulated by the owner(s) and should be avoided.

This last week I saw headlines saying there is a class action lawsuit about to be filed against Dryship. Apparently there was one filed in the Marshall Islands (where Dryship is registered, due to financial advantages for a shipping company), and it
was dismissed. I read the investors were now trying to sue in the U.S., but not
sure if this is accurate.

Anyway, as I went searching around for move info, I found something interesting on
Seeking Alpha, who was all in favor of these stocks a couple of years ago.

Benko Investigated For Money Laundering: What Does This Mean For DryShips And Ocean Rig Investors?

November 29, 2011

The international media is reporting detailed information about George Economou's business interests which are not covered by the U.S. media. In fact, the articles are generally not written in English. Recently, an acquaintance of mine translated some of the latest news media concerning George Economou and his business partners for me. The news was insightful, to say the least.

Rene Benko and George Economou are business partners. Benko is the largest property investor in Europe - founding his company at the age of 22, likely financed from family wealth. Economou owns 50% of a company run by Benko called Signa Holding. The company Economou owns which has this ownership interest is called GlobalBasis Limited. Both Benko and Economou are making plans in a joint venture of sorts to try and purchase Galeria Kaufhof, 134 shopping malls in Germany, for the price of 2.4 billion euros.

The media is also reporting that Rene Benko is in the focus of the Vienna general prosecutor. He is suspected of money laundering, and the prosecutor has a large amount of evidence. This means that George Economou is not only highly suspect of illegal and unethical business activities himself, but his largest and most current business partner is now being formally accused of money laundering in Austria.

Economou and his related parties have been suspected for insider trading on the recent purchase of OceanFreight (OCNF), as illustrated in my prior article.

Economou has led many, many transactions between his private companies (Cardiff Marine, Drytanks) and his publicly traded companies (Dryships (DRYS), OceanRig (ORIG), OceanFreight). On a daily basis, Economou's private companies manage the logistics of Dryships and Ocean Rig. The fees are widely seen as out-of-line with arms-length transactions. Additionally, most every ship Economou has purchased for Dryships can be demonstrated to have been overpaid for by at least a few million dollars when compared to purchases he has made for his privately held companies.

Most Dryships followers are aware of the infamous options Economou sold to himself and then let expire, allowing him to bank millions during the peak of the financial crisis, but even the more recent oil tankers purchase was dramatically out of line with market values. Economou evaded the subject of valuation by talking up a spinoff for the assets, which still has not happened.

All of this information begs the question, who will protect the Dryships and Ocean Rig investors in the United States if all of these allegations prove correct and these companies go bankrupt? It also begs the question, why would bankers be so stupid so as to make exceptions for Dryships' broken loan covenants over and over again? Why would banks trust someone who clearly has such a questionable ability to fairly and competently manage a company? It also begs the question, are the Greek shippers and their related parties somehow partly responsible for the debt problems in Greece?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
This article is tagged with: United States

Will NOL buy Hapag-Lloyd?

Report in Journal of Commerce says talks are on....

Report in Germany comes as TUI prepares to sell remaining stake

Neptune Orient Lines is back in talks with Hapag-Lloyd about a possible purchase of the German container ship operator, according to a published report in Germany.

Singapore-based NOL broke off acquisition talks in 2008 after failing to agree on a price for Hapag-Lloyd, which is owned by a consortium of Hamburg-based investors and tourism group TUI.

TUI plans to sell its remaining 38.4 percent stake in the German container line by January so it can to focus solely on its tourism business.

The German newspaper Die Welt, in a report Saturday that did not identify sources, said NOL was in contact with TUI management, with more talks planned for January, and a concrete offer is expected early next year.

A TUI spokesman confirmed its intention to divest its stake in Hapag-Lloyd but said he would not comment on market rumors.http://www.blogger.com/img/blank.gif

The Hamburg investors have a right of first refusal to buy TUI's stake, the paper said.

If no such deal emerged by Sept. 30, 2012, TUI could sell its stake to a third party along with enough shares from the Hamburg investors to give the outsider a majority stake.

click here for link

Moody's Downgrades CMA CGM

Moody's has downgraded CMA CGM. Following is the report from Moody's.

They do not make any mention of the just announced cooperation with MSC.

I don't know if this action was taken before that announcement, or,
more likely, Moody's will just wait to see what the numbers show. Meaning,
what benefit to the bottom line CMA CGM demonstrates from this new cooperation.

Rating Action:
Moody's downgrades CMA CGM to B2 from B1; outlook negative
Global Credit Research - 02 Dec 2011
Approximately USD920 million of rated debt affected

Milan, December 02, 2011 -- Moody's Investors Service has today downgraded CMA CGM's corporate family rating (CFR) and probability of default rating (PDR) to B2 from B1. Concurrently, Moody's has downgraded to Caa1 from B3 CMA CGM's EUR325 million and USD475 million worth of senior unsecured notes maturing in 2019 and 2017, respectively. The outlook is negative.

RATINGS RATIONALE

The downgrade was triggered by CMA CGM's weak performance for the third quarter. As a result 2011 will be significantly weaker than estimated by Moody's last September translating into credit metrics that are likely to be very weak for the category at year end. This is linked to the poor performance of the industry during its peak season (between September and October) caused by the oversupply of vessels on the water that slashed freight rates to a very low level. The agency further commented that the rating still incorporates an assumption that industry conditions would not further worsen and that actually freight rates recover, at least modestly, in the last weeks of the year as well as in 2012, following the withdrawal of capacity currently underway on the main trade lanes.

These developments partly reflect the highly competitive structure of the industry and the concerns over increased capacity coming on stream. This has exerted pressure on operators to expand their market shares, which makes difficult for companies in the sector, including; CMA CGM to pass on the material cost increases acknowledged in the first 9 months of the year, despite good traffic volumes.

Fierce competition exists between the main players in the industry, which remains cyclical and over-reliant on short-term contracts (this, in turn, limits market-revenue visibility). These factors have credit-negative implications for the ratings of container shipping companies, because they have high operating leverage and are therefore highly sensitivity to operating cash-flow shifts.

However, Moody's continues to acknowledge that CMA CGM has a strong business profile with solid market shares globally, as well as a distinctive position in some secondary lanes that are more profitable. CMA-CGM also successfully strengthened its capital base early in 2011 and sold certain assets sold recently. This in particular boosted its liquidity. Moreover, all the major new deliveries of ships that are scheduled before end of 2012 are fully financed.

The negative outlook reflects Moody's concerns that the container market's operating conditions will remain difficult in 2012; CMA CGM's performance will therefore remain under pressure. The material slowdown in the recovery from the 2008-09 global financial crisis and recession has prompted Moody's to revise downwards its growth forecasts for most G-20 economies in November 2011. In addition, it now seems likely that traffic volumes in 2012 will be under pressure compared with both the current trend and Moody's previous expectations. Moody's notes that lower demand could exert both immediate and long-term pressure on CMA CGM and the industry as a whole, given the amount of new deliveries scheduled for the coming years. Moody's acknowledges that CMA CGM has recently obtained approval from its lender to waive the covenant test due at year-end 2011 but the next semi-annual periods could remain challenging if the current market conditions were not to improve substantially; the current B2 rating captures Moody's assumption that CMA CGM's lenders will continue to remain supportive of CMA CGM.

WHAT COULD CHANGE THE RATING UP/DOWN

Downward pressure on the rating could result from lack of short term improvement in market conditions leading to financial leverage failing to decrease below 7x; or (ii) EBIT/interest expense coverage failing to increase materially above 1.0x, both by the end of 2012. Furthere downward pressure on the ratings could result from liquidity pressures and/or failure to restore headroom under covenants.

Conversely, upward pressure could materialise as a result of (i) a reduction in CMA CGM's financial leverage sustainably and materially below 6.x; and (ii) an increase in its EBIT/to interest coverage above 1.5x on sustainable basis.

PRINCIPAL METHODOLOGIES

The principal methodology used in rating CMA CGM S.A. was the Global Shipping Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Headquartered in Marseilles, France, CMA CGM is the third-largest container shipping company in the world (measured in twenty-foot equivalent units, or TEU). CMA CGM recorded last-12-months revenues of USD14.8 billion as of the end of June 2011, and employed approximately 17,500 employees worldwide. As of June 2011, CMA CGM's fleet amounted to 390 container ships (297 chartered-in and 93 owned), with a total capacity of 1.283 million TEU.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

Information sources used to prepare the rating are the following : parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entity or its related third parties within the two years preceding the credit rating action. Please see the special report "Ancillary or other permissible services provided to entities rated by MIS's EU credit rating agencies" on the ratings disclosure page on our website www.moodys.com for further information.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Marco Vetulli
VP - Senior Credit Officer
Corporate Finance Group
Moody's Italia S.r.l
Corso di Porta Romana 68
Milan 20122
Italy
Telephone:+39-02-9148-1100

Eric de Bodard
MD - Corporate Finance
Corporate Finance Group
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Releasing Office:
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Will Maersk continue to chase market share?

Bloomberg News has an article covering the new vessel sharing accord between MSC and CMA CGM. click here for link (also quoted below).

In the article the, this previous comment by Maersk is mentioned.

Maersk has said it is prepared to outlast rivals as the industry faces four years of overcapacity, and will reduce prices to preserve market share.

I wonder if in 6 months time Maersk will still be signing this tune. Furthermore,
if one looks at the history of VSA's, the carriers involved do not generally increase their market shares. That is, until one of them takes over their competitor, and even then, the original combined market share does not generally last.

I hope the management of Maersk thinks about this, before they continue the
drive for market share. How about changing the focus to improve service and performance?

You know, "build it and they will come?"

Offer exceptional service and the customers will come to you?

Just a thought.

By Christian Wienberg - Dec 1, 2011 8:54 AM CT

Mediterranean Shipping Co. and CMA CGM SA, the world’s second- and third-largest container lines, agreed to a vessel-sharing accord meant to fight falling rates as overcapacity makes the industry unprofitable.

The deal includes cooperation on Asia-Northern Europe, Asia-Southern Africa and South American routes, Marseille, France-based CMA CGM said today in a statement.

The partnership will compete with industry leader A.P. Moeller-Maersk A/S, which in September merged some of its Asia to Europe trades into a fixed daily service with a fleet of 70 ships. Maersk has said it is prepared to outlast rivals as the industry faces four years of overcapacity, and will reduce prices to preserve market share.

“The partnership is a result of the incredible tough competition we see in the container market with falling rates and overcapacity,” Janne V. Kjaer, a transport analyst at Silkeborg, Denmark-based Jyske Bank A/S, said by phone. “The industry will have more of these partnerships going forward as the market conditions force container lines into action.”

Maersk’s Copenhagen-based container unit has a global market share of 15.8 percent, according to estimates released today by Alphaliner. MSC, based in Geneva, has 13.2 percent and CMA CGM has 8.5 percent, according to Alphaliner. The smaller rivals are closely held.

“The agreement, which is designed to improve the two partners’ respective performance, will help to drive extensive operating synergies and enhance quality of service,” CMA CGM said. The companies will be able to “deploy the best ships in each of their fleets, while increasing the number of ports of call and frequency of sailing.”
Maersk Prediction

Maersk’s container unit last month lowered its full-year forecast to a net loss from an August prediction of a “modest” profit. The unit lost 1.58 billion kroner ($287 million) in the third quarter versus a 5.9 billion kroner profit a year earlier.

“It’s not unlikely that we will see some container lines going out of business in this unprofitable market,” said Jyske’s Kjaer, who has a “buy” recommendation on Maersk shares.

Maersk declined 580 kroner, or 1.5 percent, to 37,220 kroner at 3:46 p.m. in Copenhagen. The stock has lost 26 percent this year.

Press Release - MSC and CMA CGM agreement

Here's the press release which is on the MSC web-site (click here for link)

December 1st, 2011

MSC and CMA CGM sign major partnership agreement


The world’s second and third-largest container shipping companies have announced
the signature of a major agreement. The two family-owned companies, the Swiss-
Italian MSC and France’s CMA CGM, today agreed to form a broad-based operating
partnership spanning several trades, including Asia-Northern Europe, Asia-Southern
Africa and all of the South American markets.

The agreement, which is designed to improve the two partners’ respective
performance, will help to drive extensive operating synergies and enhance quality of
service for all of their customers.

On a certain number of trades, the partnership will also enable the Groups to deploy
the best ships in each of their fleets, while increasing the number of ports of call and frequency of sailings.

Diego Aponte, Vice President of MSC, said: “we are very happy to have signed this
broad-based partnership, which will unite our two family-owned companies in the
years ahead. The agreement offers us new opportunities to optimise the use of our
respective fleets, improve our transit times and increase our performance.”

Rodolphe Saadé, Executive Officer of CMA CGM Group, said: “for more than 30
years, our two companies have followed the same trajectory and for a number of
years we’ve cooperated on a few lines. Based on this experience and our shared
vision of the shipping industry, we have decided to step up our partnerships, which
reflect a commitment to long-term cooperation and will enable us to offer customers
improved solutions and services.”

More on CMA CGM agreement with MSC

The Financial Times has an article about the new announced
partnership between CMA CGM and MSC.

click here for link

They don't really say what the agreement entails...so guess we will have to
wait and see.

Generally these agreements are some sort of Vessel Sharing Agreement. If
they try to do anything beyond that, they will most surely get into trouble
with authorities.

In fact, I wouldn't be surprised if governments aren't looking closely at
all of the containership companies. Tt hasn't been that long ago
that they could legally get together and fix rates, and old habits die hard.

MSC and CMA CGM were 2 of the biggest rate cutters around. But, looks like
this might have come back to bite them.

We shall see.

CMA CGM to partner with MSC

CMA CGM has stated they will partner with MSC. The official announcement has not yet been made.

This is what is reported in the Journal of Commerce

MSC and CMA CGM, the world’s second and third largest ocean carriers, are joining forces on key trade routes in a game-changing move that is likely to trigger a new round of consolidation in the container shipping industry.

A spokesman for French carrier CMA CGM said the carriers will shortly issue a statement about the alliance, which is expected to involve the Asia-Europe route, the world’s biggest liner trade.

CMA CGM’s partnership with Geneva-based MSC also will cover trades to Latin America and between Asia and South Africa.

The alliance between the two family-owned companies comes at a time of deepening losses in the industry triggered by excess capacity and slowing world trade that has prompted moves by smaller carriers to pursue consolidation.

In the past week, Chile’s CSAV and Zim, the Israeli carrier, have been reported to be seeking partners, while Malaysia’s MISC announced it will exit container shipping because of mounting losses.

The CMA CGM/MSC partnership is also expected to exert fresh pressure on Japan’s top three shipping lines, MOL, NYK and “K” Line, to re-examine plans to spin off their ocean container activities into a single unit.

Global Ship Lease -suspends dividends

Global Ship Lease announced their lenders have waived the loan-to-value test
for a year, and during this time GSL will not pay dividends.

My question is, who are these "lenders", (although perhaps it is buried in the SEC filing somewhere).

Considering CMA CGM was the one who started this company, selling off ships with lease-back agreements, I would guess they might also be one of the lenders.

If you know, please post a comment.

From Reuters

Wed Nov 30, 2011 10:07am EST

* Says lenders to waive loan-to-value test until Nov 30, 2012

* Says will not pay dividends during the waiver period

* Shares up 12 pct

Nov 30 (Reuters) - Global Ship Lease Inc said its lenders have agreed to extend a key requirement under its credit facility by a year, amid a downturn in containership markets.

Shares of London-based Global Ship Lease, which had touched a year-low of $1.62 on Tuesday, were trading up 12 percent at $1.87 on Wednesday on the New York Stock Exchange.

The company had expected its loan-to-value, a ratio of outstanding borrowings to the aggregate charter-free market value of the secured vessels, would exceed the 75 percent limit.

The company, which charters vessels to shipping companies, said it will not be able to pay dividends during the period of the waiver.

CSAV looks for "strategic partner"

CSAV continues to deny their container shipping business is for sale.
I'll bet they will keep this standing until the 4th quarter results, which
will most likely be even worse. Then let's see how much good money
they are willing to spend to keep this part of the business alive.

From The Journal of Commerce

Chilean carrier continues to search for "strategic partner"

CSAV posted a net loss of $340.3 million in the third quarter, reversing a $151.8 million profit a year earlier, and the Chilean carrier denied reports that its container shipping business is for sale.

The company said it is continuing to pursue a restructuring that “involves the search for a strategic partner for our container business, but not the finding (of) a buyer for that business unit.”

CSAV posted a third quarter loss from continuing operations of $301.8 million, compared with a profit of $151.9 million a year earlier. Third quarter revenue fell 13.2 percent to $1.4 billion. Through the first nine months of the year, revenue rose 6.3 percent to $4.35 billion.

The latest losses brought the company’s net loss for the first nine months of the year to $859.5 million, compared with a $188.7 million net profit a year earlier.

CSAV has ridden a financial roller coaster in recent years. The line underwent a financial rescue in 2009, and then embarked on a rapid expansion that vaulted it into the top 10 lines in global capacity, only to retrench after heavy lhttp://www.blogger.com/img/blank.gifosses. CSAV has suspended several services and entered joint services with other carriers.

Earlier this year the company received a $1.2 billion capital injection through the issuance of new stock. The carrier also unveiled a new corporate structure that split CSAV’s container shipping line from its ports, tugboat and shipping services unit, SAAM, “with the objective of propelling the growth of the latter.”

CSAV this month announced plans for a joint venture between SAAM and Boskalis, the Dutch dredging and marine services group, for a towage operation in Central and South America.

Will CSAV sell container business?

I saw an article that CSAV was seeking a buyer, then I saw they claimed they
were not....so I don't know what is going on.

This appeared on the Hellenic Shipping News web-site

Tuesday, 29 November 2011 | 00:00

CSAV seeks buyer for container business after successive quarter losses

Compañía Sud Americana de Vapores (CSAV), the Chilean shipping line, is seeking a buyer for its container business after posting successive quarterly losses.
The struggling South American shipper has brought in financial advisors from Celfin Capital to aid with the sell after the company was unable to reverse the heavy losses experienced in Q2.
During Q3, CSAV posted further losses of US$343 million following Q2’s similar loss of $339 million. CSAV recorded profits of $149 million during Q3 the previous year, according to IFW.
“The decline in freight rates, lower utilisation of vessels and the high cost of fuel continues to negatively impact the margins of the industry and of CSAV,” commented CSAV.
To help reduce even further losses in the final quarter of the year the Chilean firm has taken the action of suspending at least four services and is in discussions with Dutch-based Boskalis to operate a joint towage service, according to Lloyd’s List.
Alliances have also been organized with rival carriers to aid the firm’s Asia-Africa, South America-Europe, Asia-west coast Latin America, Asia-Brazil and India-Europe services next year.
In further bad news for container lines, Zim Integrated Shipping Services, the Israeli shipper, has reported third quarter net losses of $66 million. Zim recorded profits of $37 million earlier in the year.
Source: Port Tecnology

MISC to end container service

MISC of Malaysia, has decided to end their container operation, due
to losses. This is an indication of how bad it is for container carriers.
In my opinion, there will be more to come.

From Bloomberg News

MISC Bhd. (MISC), Asia’s largest shipping line by market value, said it will stop operating container vessels after the unit lost $789 million in three years.

The move will result in a one-off $400 million charge this year and a full-year loss, Kuala Lumpur-based MISC, controlled by Malaysia’s state oil company Petroliam Nasional Bhd., said in a statement today. Operations will halt by the end of June.

“It’s a good thing for them in the mid-to-long term,” said Firdaus Hisham, a Macquarie Securities Ltd. analyst in Kuala Lumpur. “The margins were never that attractive.”

MISC also said second-quarter net income fell 62 percent from a year earlier to 140.9 million ringgit ($44 million) as losses from carrying containers offset profits at units operating liquefied natural gas tankers and building offshore facilities. Mitsui O.S.K. Lines Ltd. and Nippon Yusen K.K. have also announced container-shipping capacity cuts this year as tumbling rates cause industrywide losses.

“In view of the expected larger demand of investment in the liner industry, the cost for us to remain relevant in the liner business is untenable,” MISC Chief Executive Officer Nasarudin Md Idris said in an e-mailed statement today.
MISC Fleet

MISC had 30 container ships in its fleet of 173 vessels as of Nov. 1, according to its website. The company also had 29 LNG ships, 83 petroleum tankers and 28 chemical tankers.

The shipping line reorganized its container business in January 2010 by exiting Asia-Europe routes to focus on intra- Asia services.

MISC halted its stock in Kuala Lumpur ahead of the announcement. The shares have fallen 27 percent this year, worse than a 5 percent drop in the benchmark FTSE Bursa Malaysia KLCI Index.

The company’s sales dropped to 2.6 billion ringgit in the three months ended Sept. 30 from 3.1 billion ringgit a year earlier, it said. Its container unit had a 313 million ringgit operating loss compared with a 454.5 million ringgit operating profit in energy-shipping over the past two quarters.

CSAV - in the red

Article from Mundo Maritimo states CSAV lost $343 million USD in the 3rd quarter of 2011.

Lloyd's List claims CSAV is looking for a buyer for their container shipping business.

This is the spanish version from Mundo Maritimo, there is an english version
further down.

Una pérdida por US$343 millones registró en el tercer trimestre la Compañía Sudamericana de Vapores –controlada por los grupos Luksic y Claro-, la que se compara con la utilidad de US$149,5 millones de igual lapso de 2010. Esta cifra es similar a la del trimestre inmediatamente anterior (-US$ 339 millones), con lo cual a septiembre la naviera acumula un saldo negativo de US$868 millones, frente a una utilidad de US$179,9 millones de similar lapso del año previo.

Las ventas de CSAV al tercer trimestre llegaron a US$4.351 millones, con un incremento de 6,3%, pero los costos crecieron 36%. La empresa detalló que su volumen transportado a septiembre alcanzó a 2.520.549 Teus de arrastre, lo que representa un aumento del 23% respecto de igual período del año anterior (-3% a igual trimestre del 2010), pero las tarifas de flete cayeron en cerca de un 13% en el mismo período (20% con respecto a igual trimestre del año anterior). Es así como en el tercer trimestre las ventas sumaron US$1.401 millones, con una baja de 13,2%.

El importante aumento de los costos de ventas, según Vapores, se explica principalmente por los gastos asociados al aumento en el volumen transportado y por el significativo aumento en el precio promedio de combustible. Esta alza en el valor de combustible consumido durante el período hizo que como porcentaje de los costos de venta consolidados este componente pasara de 23% a septiembre de 2010 a 26% a igual mes de 2011. Sin embargo, cabe destacar que en los Estados Financieros se indica que al 30 de septiembre de 2011 el Grupo CSAV arrienda, en régimen de arrendamiento operativo una cantidad de 147 barcos (174 en diciembre 2010) y 340.242 contenedores (387.669 en diciembre 2010). Esto le implica compromisos totales por US$2.577 millones, de los cuales US$791 millones son a menos de un año, US$973 millones hasta tres años, US$373 millones entre tres y cinco años, y US$439 millones a más de cinco años.

CSAV agrega, en su análisis razonado, que “las condiciones de mercado del cuarto trimestre son, hasta el momento, mucho más negativas que aquellas que se esperaban hace unos meses. Las tarifas de la industria (índice SCFI) no sólo no mostraron las alzas esperadas de la alta temporada, sino que están casi 18% más bajas que en el segundo trimestre, mientras que el combustible (IFO 380, Rotterdam) se ha mantenido en niveles muy altos”. Sin embargo, afirma que las medidas de reestructuración deberían morigerar las pérdidas en el cuarto trimestre, y sentir los beneficios en 2012.

English version from Google translate

A loss of $ 343 million in the third quarter, the South American Steamship Company, controlled by the Luksic group and clearly, which compares with net income of U.S. $ 149.5 million the same period in 2010. This figure is similar to the previous quarter (-US $ 339 million), which accumulates to September shipping a negative balance of U.S. $ 868 million, compared with a profit of $ 179.9 million a year earlier similar .

CSAV sales for the third quarter reached U.S. $ 4,351 million, an increase of 6.3%, but costs increased 36%. The company explained that its volume moved to September reached 2,520,549 TEUs of drag, which represents an increase of 23% over the same period last year (-3% the same quarter of 2010), but the freight rates fell in about 13% over the same period (20% over the same quarter of previous year). Thus, in the third quarter, sales totaled U.S. $ 1,401 million, a decrease of 13.2%.

The significant increase in cost of sales, as steam, mainly due to costs associated with the increase in transport volume and by the significant increase in the average price of fuel. This rise in the value of fuel consumed during the period made as a percentage of consolidated sales costs this component went from 23% to September 2010 to 26% the same month of 2011. However, it is noteworthy that in the financial statements indicates that the September 30, 2011 CSAV Group leases, operating leases on a number of 147 boats (174 in December 2010) and 340 242 containers (387 669 in December 2010). This implies total commitments of U.S. $ 2,577 million, of which U.S. $ 791 million is less than a year, U.S. $ 973 million to three years, U.S. $ 373 million three to five years, and $ 439 million over five years.

CSAV adds, in its rationale that "market conditions in the fourth quarter are far, far more negative than those expected for some months. The industry rates (index SCFI) not only showed the expected increases in the high season, but are almost 18% lower than in the second quarter, while fuel (IFO 380, Rotterdam) has remained too high. " However, claims that the restructuring measures should be moderating the losses in the fourth quarter, and feel the benefits in 2012.

Zim needs cash

According to an article in Bloomberg News, Zim will need cash unless the business
improves this year. From what I hear from folks in the industry, that is
not likely to happen.

Lloyd's List has a headline saying Zim is looking for a merger.

In any event, looks like something needs to happen to keep Zim afloat (sorry for the pun!)

From Bloomberg News

Israel Corp.’s Zim Unit Posts Quarterly Loss as Costs Rise

By Shoshanna Solomon - Nov 24, 2011 10:04 AM CT

Israel Corp. (ILCO)’s Zim Integrated Shipping Services Ltd. unit reported a third-quarter loss of $66 million after a year-earlier profit of $37 million as transport prices fell and costs increased.

Shares of Israel Corp., the holding company controlled by the Ofer family, slumped 5 percent to 2,110 shekels, the lowest since September 2009.

“It is still early to evaluate the full impact of Zim on Israel Corp.,” Eran Yunger, an analyst at Midgal Capital Markets in Tel Aviv wrote in an e-mailed report today. Zim “will need an additional injection of cash if there is no change to its business environment,” he wrote.

Container lines’ earnings have slumped this year as fuel prices increase, while rates on Asia-West Coast routes decline. Extra trans-Pacific capacity may prevent the lines from pocketing surcharges that usually make the second half their most profitable period.

Standard & Poor’s Maalot cut Zim to “ilBB-” from “ilBBB- ” with a “negative” outlook today, saying the erosion of transport tariffs and an increasing supply of competing ships will lead to “continued deterioration” at the shipping company.

Israel Corp.’s third-quarter profit rose to $156 million from $106 million a year earlier as revenue increased 21 percent to $3.08 billion.

U.S. Thanksgiving Day

Today is Thanksgiving Day in the U.S.

It's one of our best holidays, as it's all about eating, and just
enjoying getting together.

Well, of course, that is if you enjoy your relatives.

When I was in Spanish school in Chile, one of my teachers
was puzzled by the whole "turkey" thing which is traditional
for U.S. Thanksgiving.

I realized this is portrayed so many times in our U.S. culture.
So, here's the thing.

We only cook turkey once a year, for Thanksgiving. And, because
the bird is so big, it takes a long time to cook. If you don't cook it
long enough, it's not fit to eat. If you cook it too long, it's all
dried out. It takes at least 3-6 hours to cook, depending on the size of
the turkey.

Furthermore, so many people don't cook, they don't even know how to
start.

As for me, I have been through this before. It's no big deal. The
turkey is already cooked, actually, everything is cooked, and it will
just be reheated for dinner.

Thank goodness for microwaves.

Happy Thanksgiving to everyone.

Vale to control shipping of iron ore

The last couple of years the ships which carry iron ore from Brazil to China
have caused much of the shortage in the break bulk ship availability.

This led to the large swings in the Baltic Freight Index, as well as caused
huge increases in the cost of moving iron ore.

Vale, of Brasil, who is the largest supplier of iron ore to China decided
to take more control of the shipping costs by owning the ships.

But this has also created tensions with their biggest customer, the Chinese.

From Bloomberg News

By Bloomberg News - Nov 22, 2011 6:49 PM CT

The Vale (VALE) Brasil, the biggest commodity ship ever built, was designed to carry iron ore to China from South America. After six months in operation, it hasn’t done that once.

China’s refusal to accept the Brasil has derailed Vale SA (VALE3)’s push to control shipments to its biggest customer by building up a fleet of 35 ships, each almost as large as the Bank of America Tower in New York. Rio de Janeiro-based Vale, the world’s biggest iron ore miner, ships about 45 percent of sales to China, the largest consumer of the steelmaking ingredient.

Vale’s plan, which includes buying 19 vessels for $2.3 billion, has spurred opposition from Chinese shipowners who say it will worsen overcapacity, slumping cargo rates and industrywide losses. Steelmakers are also likely against it as the ships would give Vale more control over pricing and delivery, said Chang Tao, a China Merchants Securities Co. analyst.

“Nobody in China wants Vale’s fleet to come,” he said. “Not shipping lines, not shipowners, not steelmakers.”

The miner may struggle to find alternative uses for all ships as no other markets are as big, he said. Vale also likely can’t cancel vessel orders or quit leasing contracts without paying “very heavy penalties,” said Ralph Leszczynski, the Beijing-based head of research at shipbroker Banchero Costa & Co.

“I’m pretty sure that Vale themselves have by now realized that they made a big mistake,” he said. “I find it really incredible that they committed so much money in this project without first getting written assurances from the Chinese side that they would be able to use the ships.”
Daewoo, Rongsheng

Vale’s press-relations office in Rio de Janeiro declined to comment. The miner is buying vessels from China Rongsheng Heavy Industries Group Holdings Ltd. and Daewoo Shipbuilding & Marine Engineering Co. (042660) It will also lease eight from STX Pan Ocean Co. under a $5.8 billion 25-year deal, according to 2009 statements from the Seoul-based shipping line.

Vale’s then-chief executive officer Roger Agnelli oversaw agreements for the 400,000 deadweight-ton vessels to reduce a reliance on outside shipping lines and risks from changes in freight costs. The Baltic Dry Index, a benchmark for global commodity-shipping rates, fluctuated more than 40 percent on an annual basis every year except one from 2001 to 2010.
130 Million Tons

The Vale vessels are about twice as big as the capesize ships that are now generally used to ferry commodities from Brazil to China. The miner plans to send about 130 million tons of iron ore on the route both this year and next.

The company is also investing $1.37 billion to set up a distribution centre in Malaysia that will be able to handle the very large ore carriers. Transferring cargo there to smaller vessels for shipment to China would likely increase freight costs, eroding at least some of the gains from the larger vessels’ size and fuel efficiency, said China Merchants’ Chang.

Vale has held talks with Chinese shipping lines about selling or leasing the about 360-meter-long vessels, Teddy Tang, the chief financial officer of its China operations, said in September. No deals had been reached.

The China Shipowners Association, whose members hold about 80 percent of the nation’s shipping capacity, has advised lines not to take the vessels, said Executive Vice Chairman Zhang Shouguo.

“The most important thing for Vale is to stop building,” said Zhang, a former deputy director in the transport ministry’s shipping division. “The additional capacity will exacerbate the already bad freight market.”

The China Iron & Steel Association has no position on suppliers’ shipping operations as long as they aren’t used to manipulate iron-ore prices, said General Secretary Zhang Changfu.
Rongsheng Heavy

The Brasil was this week in the Arabian Sea headed for Oman, according to data on the Bloomberg terminal. The ship was handed over to Vale by Daewoo Shipbuilding in May. The Seoul-based shipyard has also delivered two other similar-sized vessels, as it works through orders for seven worth a total of $748 million. More deliveries will follow next year and work is progressing as planned, the shipbuilder said by e-mail.

Vale also ordered 12 of the very large ore carriers from Rongsheng Heavy for $1.6 billion in 2008. The Shanghai-based shipbuilder expects to deliver the first this month, said Chief Executive Officer Chen Qiang. The handover is about two months late because of certification issues, he said. The company has begun building the other 11 on-order ships, with Vale paying in installments as work progresses, he said.

“I am not worried about any possibility of Vale canceling orders,” Chen said. “They need the ships to carry iron ore, and the vessels are greener and more advanced.”
Management Shakeup

Vale CEO Murilo Ferreira, who took on the job in May, this week named a new logistics head, Humberto Freitas, as part of a management reshuffle. The previous operations head, Eduardo Bartolomeo, will run the company’s fertilizers and coal unit.

Ferreira’s new regime may also herald a change in the approach to shipping, which could be announced at an investor day next week, said Rafael Weber, a Porto Alegre, Brazil-based Geracao Futuro Corretora analyst.

“They can’t fight with their main customer,” he said. “The company may decide against going ahead with it to avoid discord with the Chinese government.”

China’s Transport Minister Li Shenglin said earlier this month that the government will strengthen control of vessel deliveries and “guide the orderly arrival” of new ships amid tumbling rates and losses for shipping lines. China Cosco Holdings Co., the nation’s largest sea-cargo carrier, lost 4.8 billion yuan ($755 million) in the first nine months.
China Ports

The Vale Brasil was diverted on its maiden voyage in June from its original destination of Dalian, China to Italy after a request from a European customer and because “draft services” at the Chinese port weren’t ready, Ferreira said in July. The ships will “undoubtedly” go to China when needed, he said.

The ports of Dalian, Qingdao and Majishan near Shanghai are able to handle Brasil-sized vessels, Vale said in June. Qingdao, northeast China, hasn’t opened its facility because of “restrictions,” Li Yuzhai, a spokesman for Qingdao Port (Group) Co., said yesterday.

Calls to Majishan port yesterday went unanswered. Dalian Port PDA Co. (2880)’s press office referred enquiries to the company’s iron-ore handling unit. Calls there weren’t answered. A call to the ministry of transport wasn’t answered.

STX Pan Ocean has begun operating one of its eight VLOCs for Vale. The vessel is awaiting loading in Brazil, the shipping line said by e-mail yesterday. No changes to its agreement with Vale are expected, it said. The shipping line’s vessels are being built by affiliate STX Offshore & Shipbuilding Co. (067250)
BW Group, Oman

BW Group will also operate four vessels for Vale, the miner said in 2007. One, the Berge Everest, was due to be delivered in September by Bohai Shipbuilding Heavy Industry Co., according to a statement on the website of BW affiliate Berge Bulk.

Rongsheng Heavy is also building four VLOCs for Oman Shipping Co., which will be leased to Vale and used to haul commodities to the sultanate. The vessels are all due to be delivered in the second half of 2012, the shipping line said by e-mail yesterday.

Still, Vale needs to use ships on China routes to fully utilize the fleet, and the country’s opposition to the vessels is unlikely to weaken, said Huang Wenlong, a Hong Kong-based analyst with BOC International Holdings Ltd.

“Once Vale moves its own iron ore, its control on the supply of iron ore extends into shipping, further diminishing Chinese steelmakers’ bargaining power,” he said. “That is a situation China doesn’t want to see.”

CMA CGM sells ships

From Bloomberg News

CMA CGM SA, the world’s third- largest containership line, said it’s selling two so-called post- panamax vessels.

The ships are the CMA CGM Wagner and the CMA CGM Verdi, the Marseille, France-based company confirmed by e-mail today. CMA CGM declined to say whether it had reached agreement on or finalized a sale.

Both vessels, built in 2004, were sold for $45 million to undisclosed Greek interests, Clarkson Research Services Ltd., a unit of the world’s biggest shipbroker, reported Nov. 19. A post-panamax ship is too large to navigate the Panama Canal.

The French company has 408 vessels and nine more on order at shipyards, making it bigger than any competitor except Maersk Line and Mediterranean Shipping Co., according to Clarkson.

CMA CGM sold 25 vessels between March 2010 and Nov. 18 of this year for $627 million, according to London-based Seasure Shipping Ltd. Seasure publishes VesselsValue.com, an assessor and tracker of sales and purchases of container ships, tankers and dry-bulk vessels.

TUI to sell remaining interest in Hapag-Lloyd

Back when TUI did the deal with a group of investors to buy part of Hapag-Lloyd,
part of the deal was an option for Albert Ballin (the investor group), to
buy the remaining interest of TUI in Jan. 2012.

Albert Ballin probably has second thoughts about this.

I don't know the terms, but guess they will probably have to buy the rest
of the shares at the previously agreed price.

From Bloomberg News

TUI AG (TUI1) plans to sell its remaining stake in the Hapag-Lloyd AG container-shipping business in January and expand further in Russia and China as the German tour operator redefines its business model.

“We looked for ways to exit Hapag-Lloyd such as finding a new investor or doing an initial public offering, but without having the chance to succeed we’re back to our right to tender our stake,” Chief Financial Officer Horst Baier said yesterday in an interview in Frankfurt. “Assuming we get all the approvals, we’ll execute our option on Jan. 2.”

TUI sold a majority stake in Hapag-Lloyd, Germany’s biggest container line, to Hamburg-based investment group Albert Ballin GmbH in March 2009. The travel company still owns 38.4 percent and has the option to sell a stake to Ballin on Jan. 2.

With an exit from shipping, Hannover-based TUI will be better suited to optimize its tourism business with expansion in Russia as well as China and India, the CFO said. In China, TUI plans to boost its trade in sending tourists to Europe.

“We are currently No. 5 in Russia and plan on becoming No. 2 in the next two-to-three years,” Baier said. “In Asia, we are at the very beginning of our journey, but plan to expand in China and India.”

Baier said the company is “pushing” online offerings and already has about 70 percent of destinations online in Scandinavia, while the percentage is “weaker” in Germany. The company also wants to expand market share in the German-speaking market for cruises, the CFO said.

“It’s frustrating to see how Europe’s debt crisis has affected the real economy and investor sentiment, however we had other years where we had some insecurity and where things cooled down,” Baier said. “We should wait a little bit more to see the outcome of the crisis.”

TUI is scheduled to report yearly earnings on Dec. 14.

The shares dropped 3 percent to 3.89 euros at the close of trading in Frankfurt today, the lowest since Oct. 5. They have fallen 63 percent this year.

Update- General Maritime

General Maritime filed for Chapter 11 this week.

Now creditors are opposing their plans.

Looks like this could get messy. The courts will get to sort it out.

From Bloomberg News

A group of General Maritime Corp. noteholders opposed a request by the second-largest U.S. owner of oil tankers to borrow $75 million in bankruptcy.

General Maritime is scheduled to seek permission from U.S. Bankruptcy Judge Martin Glenn in Manhattan court today to draw $30 million of a $75 million loan to fund operations while it reorganizes. The company, which operates in over 230 ports of call in over 70 countries, filed for bankruptcy protection yesterday after falling oil demand and a surplus of ships led to two years of losses.

The terms of the loan will “serve to prematurely limit or foreclose the rights of unsecured creditors or any official committee appointed to represent their interests,” the noteholder group said in court papers filed today.

The ad-hoc group, which doesn’t have formal standing in the case, owns over $185 million in 12 percent senior notes due 2017. It includes Capital Research and Management Company, J.P. Morgan Investment Management, Inc., J.P. Morgan Securities LLC, Stone Harbor Investment Partners LP and Third Avenue Focused Credit Fund.

General Maritime’s proposed loan is from Nordea Bank Finland Plc and other lenders. The company also has a plan to restructure with certain lenders; negotiations leading up to its bankruptcy led to a “restructuring support agreement” under which lender Oaktree Capital Management LP agreed to make a $175 million equity investment.
New Company

The agreement will convert all of the company’s debt into stock in a newly created company, and lenders would agree to vote in support of a plan of reorganization under certain terms, according to court papers.

The noteholder group said that junior secured lenders to a $200 million loan, which includes an affiliate of Oaktree, shouldn’t benefit from protections given to Nordea Bank and other lenders to the $75 million “debtor-in-possession” financing. Such loans allow companies to keep operating in bankruptcy and give them a higher priority to be repaid.

They also said a $75,000 reserve set aside to fund investigations into any claims the estate might have is too low.

Freight rates for oil carriers have fallen to the lowest in at least 14 years, prompting General Maritime to warn in a Sept. 30 regulatory filing that it might file bankruptcy.

Single-voyage rates for very large crude carriers, hauling about 20 percent of the world’s oil, averaged $7,627 a day this year, compared with $32,006 in 2010, according to the London- based Baltic Exchange, which publishes costs along more than 50 maritime routes.
March Loan

General Maritime has been restructuring its balance sheet since at least March, when it took out a $200 million loan from Oaktree Capital Management to refinance 2005 debt and amend 2010 debt, according to the most recent annual report, filed in March.

Among the largest unsecured creditors listed in court papers were Bank of New York Mellon Corp. (BK), trustee for holders of $300 million in 12 percent callable bonds due in 2017.

The New York-based company listed assets of $1.71 billion and debt of $1.41 billion today in a Chapter 11 petition in U.S. Bankruptcy Court in Manhattan.

The case is In re General Maritime Corp. (GMR), 11-15285, U.S. Bankruptcy Court, Southern District of New York (Manhattan).