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).

Blah, Blah, Blah

There is a video on the JOC site. This is the by-line

Ron Widdows, senior advisor to Neptune Orient Lines, says container lines will have to reduce capacity to sustain freight rates and get away from the 'destructive behavior' that is feeding steep losses.

I remember when working for a carrier, and my bosses would complain about
"the other carriers which are destroying the marketplace"...
I would retort

"That's competition....it's like K-Mart complaining about Wal-Mart".

For you young'uns, that was about 20 years ago, when Wal-Mart didn't even
have stores in New Jersey (where I lived).

My how times have changed.

Not every carrier can, or should even strive to be, the biggest in the world.

It's not always about price, although carriers are led to believe it is.

You would not believe the mark-up some NVO'S get away with, just because they
offer the service which carriers no longer offer.

I am not sure of the situation today, but use to be, if you were a Maersk customer who shipped less than 1000 TEU's a year, you didn't get to talk to a real person.
You had to use the internet, or have your forwarder or broker get the information.

For anyone who use to work for me, probably some of their memories are
me yelling "ANSWER THE PHONE".

I really can't be sympathetic to all the whining.

CMA CGM - will they survive?

I was kinda busy earlier this year with "life", so wasn't paying much
attention to the shipping world for some time.

However, recently noticed lots of readers looking for information on CMA CGM.

I found this article from Sept. 2011 in Bloomberg, which was quite disturbing, especially if you are a CMA CGM shareholder or creditor.

Zero Freight Rates Fueling CMA CGM Default Risk to 90%

By Patricia Kuo and David Goodman - Sep 5, 2011 6:12 AM CT

Bonds and derivatives tied to CMA CGM SA, the third-largest container line, are signaling that the company has a nine in 10 chance of defaulting as the slowing global recovery pushes freight rates to about zero.

Penalized by the U.S. last month for breaching trade sanctions with Iran, Cuba and Sudan, CMA CGM has seen the price of its $475 million of 8.5 percent notes due 2017 plunge to 47.25 cents on the dollar since they were sold April 14, Bloomberg Bond Trader prices show. Credit-default swap prices signal a 90 percent probability of the Marseille-based company being unable to meet its obligations within five years.

Freight charges collapsed on the Asia-to-Europe lines, the world’s second-busiest route, as a capacity glut combines with the slowest growth in trade since 2009. Rates excluding fuel surcharges were “practically” zero in July and little changed last month, the worst run ever, according to Menno Sanderse, an analyst at Morgan Stanley in London.

“Shipping and logistics is a pretty beat-up sector,” said Louis Gargour, who owns the bonds as the chief investment officer at LNG Capital LLP, a London-based hedge fund he co- founded in 2006. “The good side is everybody I know is very interested in this company at 50 cents on the dollar, although it’s a gamble.”

CMA CGM was founded by Jacques Saade in 1978 after he fled to France from Lebanon’s civil war. It employs more than 17,200 people and runs a fleet of 394 vessels, according to its website. The company grew from five employees and a rented boat into a global operator, ranking behind Copenhagen-based A.P. Moeller-Maersk A/S and Mediterranean Shipping Co. SA in Geneva.
Debt, Earnings

The company posted an 8 percent increase in first-half sales to $7.3 billion and had $675 million of cash at the end of July, according to a statement on its website. CMA CGM said it had $5.3 billion of net debt at the end of June and recorded $685 million of earnings before interest, tax, depreciation and amortization in the first half of the year.

That means debt is more than three times Ebitda, compared with a ratio of about less than one time at Maersk, according to that company’s earnings report on Aug. 17.

CMA CGM also issued 325 million euros ($459 million) of 8.875 percent bonds maturing in 2019 in April, which were quoted at 49 percent of face value, Bloomberg Bond Trader prices show.

Default swaps on the company’s debt cost 4.8 million euros upfront and 500,000 euros annually to insure 10 million euros of debt for five years, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market. The contracts have risen from 800,000 euros upfront on June 6.
Bonds ‘Whipsawed’

“We are surprised to see the value of the debt drop so much,” said Michel Sirat, the container line’s chief financial officer based in Marseille. “Our bonds are whipsawed because of prevalent fears in financial markets and questions about our liquidity, but we have a strong cash position and are fully compliant with our debt covenants.”

The drop in its bonds prompted the company to issue a statement on Aug. 3, saying it’s taking the “poor performance very seriously,” and that it doesn’t plan major new investments this year and next.

CMA CGM is rated B+ by Standard & Poor’s, which said in a May report that the company’s rankings are constrained by its “high operating risk in the cyclical, capital-intensive, and competitive container-shipping industry.”
Covenants Breached

The container line has about $4 billion of loans, according to data compiled by Bloomberg. Covenants on most of its borrowings were breached in 2009 after a slump in world trade amid the deepest financial crisis since the 1930s.

CMA CGM received $500 million from Turkish family-owned company Yildirim in November in return for a 20 percent stake as it sought to restructure about $5 billion of debt. In May, Yildirim agreed to buy 50 percent of Malta Freeport Terminals from CMA CGM for 200 million euros.

Analysts are increasingly bearish on what slowing trade growth means for shipping company earnings. Maersk, the world’s biggest container-shipping line, will report a 25 percent slump in net income to 19.71 billion kroner ($3.8 billion) this year, the mean of 16 estimates compiled by Bloomberg shows.

The industry may lose $2.5 billion to $3 billion this year, said Philip Damas, director of liner shipping and supply chains at Drewry Shipping Consultants Ltd. in London. Owners and operators lost $20 billion in 2009, when the global container trade contracted for the first time ever, he said.
‘Risk of Default’

“A lot of companies run the risk of default if freight rates remain at such a low level,” said Jacob Pedersen, an analyst at Sydbank A/S, Denmark’s third-largest publicly traded lender. “Companies have been taken by surprise this quarter because just a few months ago they were all sure there would be a lack of capacity and that would be positive for freight rates.”

Risk aversion has wiped out $5 trillion of global equity market value since July and brought high-yield bond sales to a halt. A Labor Department report on Sept. 2 showed the world’s largest economy added no jobs last month while a contraction in European manufacturing and plunging business and consumer confidence suggest the slowdown in growth may continue into the third quarter, members of the so-called shadow European Central Bank council said last week.
Sanctions Violated

Confidence in CMA CGM was also dented after the company’s U.S. unit paid a $374,400 settlement to the Department of Treasury’s Office of Foreign Assets Control last month following allegations it violated sanctions in exporting goods to Sudan and accepted payments for shipping services in connection with Cuba and Iran.

The alleged violations of sanction programs took place between December 2004 and April 2008 and there was no finding of fault, according to a company statement.

CMA CGM’S MV Victoria container ship was seized by the Israeli Navy after the shipper of three containers falsely described cargo contents as lentils when in fact they contained weapons, the company said on June 1. An Iranian company used one of its vessels to illegally transport arms to Lagos after labeling them as “packages of glass wool and pallets of stone,” the company said in October.

CMA CGM isn’t alone in dealing with maritime disputes. China Cosco Holdings Co., the state-controlled sea-cargo group, had at least three vessels arrested in the past two months as shipowners sought overdue payments, according to court filings in the U.S. and Singapore.

CMA CGM is counting on routes to emerging markets such as Latin America and Russia to drive growth as Europe stands on the brink of another recession. The company held a conference call with more than 150 bond investors on Aug. 31 to allay their concern about the company’s financial position, Sirat said.

“We see strong trades in Latin America, Russia, the Black Sea region and India, bringing in new avenues for growth besides the traditional routes of Asia to Europe and Asia to the U.S.,” Sirat said. “I hope our bond prices will recover after we explained our position to bondholders, because we intend to continue to access the bond market.”

General Maritime files Chapter 11

Hum, 2 days in a row announcement of a shipping company filing
Chapter 11.

Does not bode well for the industry.


From Bloomberg News

General Maritime Corp. (GMR), a transporter of crude oil via ocean tankers, filed for bankruptcy court protection from creditors amid low freight rates and a surplus of ships.

The New York-based company listed assets of $1.71 billion and debt of $1.41 billion in a Chapter 11 petition filed today in U.S. Bankruptcy Court in Manhattan. General Maritime, which operates mostly between the Caribbean, South and Central America, the U.S., Western Africa and the North Sea, has a fleet of 31 double-hull tankers, according to its website.

“Operations are to continue without interruption” after General Maritime reached agreements with key lenders, the company said in a statement after the bankruptcy filing. “General Maritime expects to substantially reduce its funded indebtedness and enhance its liquidity profile.”

Oaktree Capital Management LP will provide a $175 million equity investment and a group led by Nordea Bank Finland Plc will provide as much as $100 million in financing to help the company through reorganization, General Maritime said.

General Maritime joins other troubled shipping companies in bankruptcy, including Korea Line Corp. (005880), Korea’s second-largest operator of dry-bulk ships which sought U.S. bankruptcy protection in February. Time-chartered operators Britannia Bulk Plc, Armada (Singapore) Pte Ltd. and Transfield ER Cape have also filed for bankruptcy.

Balance Sheets

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

Chief Executive Officer John Tavlarios said in July that the company had made transactions to increase its liquidity, as it announced a loss of $36.8 million for the quarter ended June 30, more than double the $14 million lost in the same period a year earlier.

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.
Stock Fell

In August, the company led declines in oil-tanker stocks as analysts predicted a return to recession in the U.S. would delay any rebound in charter rates for tankers until after 2013. On Aug. 22, the company said it had received a delisting notice as its share price failed to meet the New York Stock Exchange’s minimum requirements.

The shares closed yesterday at 16 cents.

Moody’s Investors Service cut its credit grade on the company’s debt to Caa3 in September, citing the increasing likelihood of a restructuring because of “weak sector fundamentals.” The company’s “overreliance” on its cash balance, which was almost $59 million as of June 30, may cause it to fall out of compliance with a minimum liquidity covenant, Moody’s analysts said in the Sept. 1 note.

The company is likely to “have a difficult time achieving positive operating cash flow, which could threaten its ability to make cash interest payments,” the Moody’s analysts wrote. Weak freight rates will also pressure the market value of tanker vessels, cutting another source of liquidity, they wrote.

The company’s bonds steepened their decline in October after the company announced it had agreed to amend its $500 million revolving loan, its $372 million term loan, and its $200 million loan with affiliates of Oaktree. The changes waived General Maritime’s need to maintain a minimum cash balance.

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

Trailer Bridge files for Chapter 11 Bankruptcy

Chapter 11 bankruptcy in the U.S. allows a company to continue operating,
and offers protection from creditors.

Trailer Bridge announced they will continue to operate under Chapter 11

From The Journal of Commerce

Carrier maintains operations, gains DIP financing under Chapter 11

U.S.-Puerto Rico carrier Trailer Bridge filed for Chapter 11 bankruptcy reorganization on Wednesday, a day after failing to refinance $82.5 million in bond debt that became due Tuesday.

The company said it will continue operation and has an agreement for $15 million in debtor-in-possession financing. The financing, worked out with Global Hunter Securities, is subject to approval of the U.S. bankruptcy court in Jacksonville, Fla., where Trailer Bridge is headquartered.

Trailer Bridge told the Securities and Exchange Commission late Tuesday the company expected to file its quarterly report by Nov. 21, a week behind schedule. The company said it needed extra time because the company has been focused on its bond refinancing efforts.

The company said it views the Chapter 11 filing as “the quickest and most efficient way to restructure its balance sheet and ensure the long-term strength of its operations.” Trailer Bridge said it hopes to complete the reorganization by the end of the first quarter of 2012.

The bankruptcy reorganization, “if successfully implemented, will result in a revitalized company with a vastly improved and deleveraged balance sheet, “Co-CEOs William G. Gotimer Jr. and Mark A. Tanner said in a statement

Wells Fargo Bank last month granted any an extension to Nov. 14 on Trailer Bridge’s 9.25 percent senior secured bonds due Nov. 15.

In the carrier’s second quarter report Aug. 15, Trailer Bridge said it was “exploring a number or options that might involve the private or public lending market and may include an equity component, and that might result in a change of control.”

Trailer Bridge operates a container-barge service between Jacksonville, Fla., and Puerto Rico and the Dominican Republic. The company also operates motor carrier service in the 48 contiguous states.

140 Years of Hamburg Süd

Hamburg Süd has been in existence for 140 years.

That's a long time for any company.

There is a special exhibit going on in honor of this anniversary.

You may look at photos from the exhibition by
clicking on this link


Here's the press release advising of this exhibit.

Special exhibition “140 Years of Hamburg Süd” at the International Maritime Museum in Hamburg



Hamburg 15 November 2011. From 15 November 2011 to 25 March 2012, the special exhibition “140 Years of Hamburg Süd” can be viewed at the International Maritime Museum in Hamburg . It allows a unique glimpse into the history of the shipping group – with a host of historical paintings, posters and model ships. The occasion for the special exhibition is the 140th anniversary of Hamburg Süd, which was founded on 4 November 1871 by eleven eminent Hamburg merchants and ship owners.



The highlights of the show include the original model of the museum freighter “Cap San Diego” from 1961 and a 4.5-metre-long model of the celebrated Hamburg Süd passenger liner “Cap Arcona” from Blohm + Voss. Also on display are oil paintings by the well-known marine painters Hans Ritter von Petersen, Johannes Holst and Leonhard Sandrock, as well as ship posters from the 20s and 30s. The latter convey a unique impression of the glamorous era of Hamburg Süd cruises. Completing the broad sweep of the special exhibition is a film on the history of Hamburg Süd, incorporating numerous historical sequences, and an interactive sea chart showing the current location of all the shipping group’s owned vessels.



“The exhibition is like a living journey through time covering the different epochs of our history,” says Dr Ottmar Gast, Chairman of the Executive Board of Hamburg Süd. “It shows the dynamic development of a shipping company that started out in 1871 with three small steamers sailing to Brazil and La Plata and today links up the continents as one of the world’s 15 largest container lines.”

CSAV - financial information

Here's the English version of the CSAV news

This was translated by someone who is a professional translator.

If you need something translated from Spanish to English
you may contact her at nllamas@cox.net

translated by Nicolette Llamas
From MundoMaritimo 11-11-11:

CSAV is continuing to navigate turbulent waters given that in the third quarter, additional negative numbers will be added to the US$525 million that it lost in the first half of the year. That is how a recent Corp Research report is determining that the shipping line would report a negative balance of US$315 million in the July through September period, with which it will accumulate a US$840-million loss in the first nine months, estimating on the market that it would rise above US$1.1 billion in 2011.

However, in this case, the scenario is more complex since, unlike the first six months during which the loss was due to a 44.8% rise in costs that counteracted a 19% rise in sales, in the third quarter, revenue would drop 13.2%, totaling US$1.401 billion for the period, within the framework of the reduction in the size of the company that Luksic Group is promoting. In turn, CSAV’s EBITDA would be negative US$277 million as opposed to US$196 million in the black for the same period in 2010.

And for the rest of 2011 and next year, the scenario would not be favorable either, given that the shipping business will continue to have a strong imbalance between supply and demand since, according to the specialized consultant Alphaliner, the world fleet could increase 8.5% this fiscal year and 8.7% in 2012, according to the August order book. In that regard, it is estimated that ocean freight rates will continue to fall since there would continue to be a surplus of transport capacity in the midst of a less dynamic world market, accompanied by high oil prices.

The latest available numbers reveal that in September, CSAV reported a 12.2% decrease in shipped containers relative to the same month in 2010, after adding up the 242,900 TEUs that they moved. Meanwhile, in the third quarter, the company transported 785,100 TEUs, which represented a 3.4% reduction relative to a similar period in 2010.

Leasing factor

CSAV is now much more exposed than the rest to the business’ ups and downs, given that 87.2% of the 90 vessels with which it operates are leased, while the industry average is around 50% owned vessels.

Observing the results from the first two quarters from the shipping lines that report, it stands out that CSAV is by far the one showing the greatest losses, but at the same time, it is second in increasing its sales.

For CSAV, the “leasing factor” is highly significant, first of all because, according to Corp Research, not having its own fleet, it loses the opportunity to participate in the ship-owning business, which implies using the vessels as though they were property assets, and secondly, because leasing them represents around 18% of the company’s total costs. In addition, the investment bank specifies that a disconnect between the leasing price and freight rates has been being generated, “exposing a gap that is damaging to the company’s results.”

Who will merge?

There were not the anticpated merges and bankruptcies the last couple of years
in the container business. Mostly because governments inter veined.

Let's see what happens in the next year.
Some people think there will be some..

From The Journal of Commerce

Lazard's Stokes says carriers are looking to cuts costs, expand market share

Further consolidation of container shipping lines is likely as carriers seek to cut costs, expand market share and bolster balance sheets, said Peter Stokes, senior analyst and head of shipping at investment bank Lazard.

“I believe that we will finally see a number of non-cash defensive mergers as companies struggle to remain competitive on the major east-west routes or seek to strengthen their position in north-south and intra-regional trades,” Stokes told the Marine Money conference in New York.

Container shipping survived 2009’s market slump, which produced more than $15 billion in losses, without major failures or consolidation. Stokes said, however, that container shipping and certain specialized sectors of shipping may be better candidates for mergers and acquisitions than commoditized bulk shipping companies.

“This is because these are businesses which are much more complex to operate, where greater synergies can be realized and where factors such as market share and long-term customer relationships can be a significant part of value,” Stokes said. “In the current, desperately poor, container shipping market, the arguments for consolidation for purely defensive reasons are hard to refute."

He said that mergers of large container ship lines during the last 15 years have been difficult to pull off but have shaved about 3 percent off the merged companies’ operating costs. “Cost savings alone … provide a compelling case for consolidation,” Stokes said.

Mergers and acquisitions also increase market share and can provide balance sheets with the “size and strength… to support the continued heavy investment needed in the next generation of larger and more fuel-efficient container ships.”

Stokes acknowledged that some mergers of recent years, such as the 1996 union of P&O Containers and Royal Nedlloyd, and A.P. Moller-Maersk’s 2005 acquisition of P&O Nedlloyd, proved more problematic than expected.

But he said the overall experience supports the case for further consolidation of container shipping. Maersk’s purchase of P&O Nedlloyd solidified the Danish company’s dominance in container shipping, and that the acquisitions by Hapag-Lloyd of CP Ships and by Neptune Orient Lines of APL eventually produced benefits that outweighed initial difficulties.

“In all of those cases… the immediate post-deal experience for the acquirers was difficult. And yet, all three companies have survived, and all three would say they are in a better strategic position now than they would have been had they not made those acquisitions.”

Update- CSAV financial situation

There is a new article today regarding CSAV.

This is the spanish version. I will have an english translation available on
Monday.

From MundoMaritima

Turbulentas son las aguas por las que sigue navegando la CSAV, dado que a los US$525 millones que perdió en la primera mitad del año, se sumarán nuevos números rojos en el tercer trimestre. Es así como un reciente informe de Corp Research establece que en el período julio-septiembre la naviera reportaría un saldo negativo de US$315 millones, con lo cual en los nueve primeros meses acumulará una pérdida de US$840 millones, estimándose en el mercado que en el 2011 se elevaría por sobre los US$1.100 millones.

Pero en esta oportunidad el escenario es más complejo, pues a diferencia del primer semestre, en que la pérdida se dio por un alza de 44,8% en los costos, lo que contrarrestó la subida de 19% en las ventas, en el tercer cuarto se verificaría una caída de 13,2% en los ingresos, sumando en el lapso US$1.401 millones, en el marco de la reducción del tamaño de la empresa que está impulsando el Grupo Luksic. A su vez, el Ebitda de Vapores sería negativo en US$277 millones frente a uno positivo de US$196 millones de igual período de 2010.

Y para lo que resta de 2011 y el próximo año, el escenario tampoco sería favorable, dado que el negocio naviero seguirá presentando un fuerte desequilibrio entre la oferta y demanda, pues según la consultora especializada Alphaliner la flota mundial podría crecer 8,5% este ejercicio y 8,7% en 2012, de acuerdo al libro de órdenes de agosto. Y en ese sentido, se estima que los precios de los fletes navieros seguirán a la baja, debido a que se mantendría una sobreoferta en la capacidad de transporte, en medio de un comercio mundial menos dinámico, acompañado por altos precios del petróleo.

Las últimas cifras disponibles revelan que en septiembre CSAV registró una merma de 12,2% en los contenedores transportados, respecto de igual tramo del 2010, al sumar los 242.900 Teus movilizados. En el tercer trimestre, en tanto, la compañía transportó 785.100 Teus, lo que representó una disminución del 3,4% en relación a similar período del año previo.

Factor Arriendos

Vapores ahora está mucho más expuesta que el resto a los vaivenes del negocio, dado que un 87,2% de los 90 barcos con que opera son arrendados, mientras que el promedio de la industria maneja en torno a un 50% de naves propias.

Al observar los resultados del primer semestre de las navieras que informan, destaca que Vapores es lejos la que arroja mayores pérdidas, pero a la vez es la segunda que más aumentó sus ventas.

Para CSAV el “factor arriendos” es altamente sensible, primero porque –según Corp– al no contar con flota propia, pierde la posibilidad de participar en el negocio armador, el que implica utilizar las naves como si fueran activos inmobiliarios, y segundo porque la renta de éstas representa en torno a un 18% de los costos totales de la compañía. Además, el banco de inversiones detalla que se ha venido produciendo un desacople generado entre el precio de los arriendos y las tarifas de fletes, “revelando una brecha dañina para los resultados de la compañía”.

Es así como a 12 meses las obligaciones de la empresa por concepto de arriendos llegan a US$761 millones, cifra que se eleva a US$2.164 millones a cinco años, y a US$2.621 millones en total. A diciembre de 2010 –según un informe de marzo de Fitch, clasificadora que ya no cubre a Vapores– el arrendamiento consistía a 185 buques y 411.983 contenedores. Y agrega que los arrendamientos operativos tomados por CSAV con sus armadores pueden variar en plazos de entre tres meses a cinco años, mientras que en el caso de los contenedores no supera los ocho años, sin opción de renovar.

De acuerdo a Corp, el costo de arriendo diario por nave de Vapores llegaría a unos US$14.000 para fines de 2011, que crecería en base al incremento en el volumen esperado por la industria de 6% anual en el largo plazo. Y en ese sentido, si se consideran los 185 barcos de 2010, en ese año CSAV habría tenido que desembolsar unos US$945 millones sólo por ese concepto.

Estaba Escrito

Entonces, ¿cómo se explica que la Sudamericana haya tomado estos importantes compromisos, considerando el complicado escenario que venía mostrando desde hace tres años la industria naviera mundial? De hecho, el 17 de marzo de 2009 Fitch había bajado la clasificación de los bonos de Vapores a categoría BBB desde A, asignando un Rating Watch Negativo, argumentando en uno de sus puntos que “CSAV ha visto empeorar sus resultados operacionales producto de la combinación entre la caída del precio del flete naviero, la existencia de contratos de arriendo de naves a tarifas pre-crisis, y un aumento del costo del combustible”.

Cifras

13,2% bajarían los ingresos de Vapores en el tercer trimestre, sumando en el período US$1.401 millones.
US$14.000 sería la tarifa que pagaría CSAV por cada día de arriendo de los buques que opera.
US$2.621 millones son las obligaciones totales que tiene la Sudamericana por concepto de arriendo de naves.
A comienzos de 2009 se estimaba que en 2011 la flota de portacontenedores sería hasta un 60% más grande, provocando sobreoferta.

Future of CSAV

I have a site meter on this blog, where I can see what readers are searching for.

Recently, there have been a lot of people searching for "CSAV Bankrupt",
or something to that effect.

There hasn't been anything in the English news, but I found in Mundo Maritimo,
this article from September.

I am not going to translate it. If you can't figure it out, try some of
the translation programs.

However, it essentially questions the future of CSAV.


Here's the link

CSAV lanza nuevo plan de rescate por US$1.200 millones
Firma creará nueva sociedad que controlará SAAM y la podría abrir a la bolsa
Edición del 05 de Septiembre de 2011

Tras registrar pérdidas por US$525 millones en el primer semestre de este año -a causa de las negativas condiciones de precios de venta y alzas de costos-, en la Compañía Sudamericana de Vapores (CSAV) ya saben que 2011 terminará con resultados en rojo.

Para asegurar la estabilidad económica de la empresa, la mayor naviera del país anunció un nuevo plan de fortalecimiento financiero que involucra recursos por US$ 1.200 millones, monto que se basa principalmente en un aumento de capital.

Esto, porque la propuesta involucra también líneas de crédito de sus mayores accionistas, Quiñenco de los Luksic (18%) y Marinsa (20,2%, ligada a los Claro), por US$350 millones que se pagarán con dicha capitalización. En paralelo, Vapores negocia alianzas con las principales navieras del mundo y prevé crear una nueva sociedad que controlará su filial Sudamericana Agencias Aéreas Marítimas (SAAM) y que saldría a bolsa.

En un hecho esencial enviado ayer a la Superintendencia de Valores y Seguros, CSAV indicó que en la próxima junta extraordinaria de accionistas -el 5 de octubre- se votará el mencionado aumento de capital. Quiñenco se comprometió a ejercer su opción preferente y a extender su suscripción hasta los US$ 1.000 millones. Mientras, el acuerdo de Marinsa es suscribir US$ 100 millones.

Quiñenco suscribirá los US$ 1.000 millones sólo en el escenario de que no exista interés del mercado en la operación. Fuentes ligadas a ese grupo señalan que si esa situación ocurre, quedarían con un porcentaje superior a Marinsa en la propiedad de CSAV. Pero precisan que es imposible determinar hoy alguna cifra, pues aún no se determina el precio de la colocación y tampoco si habrá o no excedentes del aumento.

En dicha junta de accionistas, asimismo, se dejará sin efecto la parte pendiente del aumento de capital acordado el 8 de abril: US$ 500 millones. Ese monto era parte del plan de rescate por US$ 1.000 millones anunciado a inicios de año por la naviera.

De los US$350 millones que recibirá como préstamo Vapores, Quiñenco aportará US$250 millones y Marinsa los otros US$100 millones.

Vapores indicó que una vez que se suscriba y pague al menos US$1.100 millones del aumento de capital, dividirá CSAV con la creación de una nueva sociedad que controlará a SAAM. Los accionistas de esa nueva empresa serán los mismos dueños de Vapores. Esta modificación posibilitaría la apertura en bolsa de SAAM, indicaron fuentes ligadas a la naviera.

Dicha filial es uno de los activos más atractivos de Vapores y tiene participaciones en puertos.

¿Alianza, fusión o absorción?

Junto con las medidas para darle más estabilidad financiera y mayor caja a la compañía, en Vapores indicaron que están en la búsqueda de un socio estratégico en el negocio de portacontenedores. Fuentes conocedoras del proceso señalaron que CSAV está conversando con las principales diez navieras del mundo. Las opciones que se barajan van desde la incorporación de algunas de estas navieras extranjeras a la propiedad de Vapores o que esta última entre en alguna de sus competidoras. También se estudia una fusión, indicaron las fuentes.

Entre esas firmas podría estar Mediterranean Shipping Company (MSC), la segunda mayor naviera del mundo, y la francesa CMA CGM, la tercera del planeta. La primera del ranking es APM-Maersk.

Este año, Vapores ya logró acuerdos con MSC y CMA CGM para transportar cargas de forma conjunta, lo que les permite ahorros de costos en un mercado donde el alza del petróleo afecta fuertemente el resultado de las firmas.

Maersk losing money...

Two months ago this is what I blogged

Wednesday, September 14, 2011
Maersk struggles to raise rates

Maersk is having difficulty to raise rates because of all of the new
ships coming in, increasing capacity.

They don't mention where all these new big vessels are coming
from, but at least some of them belong to Maersk.

And today Maerk reports they lost $297 million in the 3rd quarter.

The fact that the CEO is blaming excess ship capacity on slumping cargo,
and not all the big new vessels they put into the trade, is no surprise.
What CEO ever says "we screwed up"?

From The Journal of Commerce

Carrier forecasts full-year loss as pricing slides despite volume gains

Maersk Line said Friday it lost $297 million on shipping in the third quarter amid collapsing freight rates on the key Asia-Europe trade lane, and the world’s largest ocean container carrier said it would close the year in the red.

The loss, following a $1 billion profit in the third quarter a year ago, came as average freight rates, including bunker surcharges, across Maersk’s global system declined 12 percent to $2,860 per 40 foot container from $3,251 in the third quarter of 2010.

Traffic grew 2 percent on the trans-Pacific while rates were down 16 percent. Latin American shipments grew 18 percent as rates dropped 13 percent.

”We see a couple of tough years ahead,” for the industry, Anderson said, marked by continued overcapacity and very unstable earnings.

“It’s not an environment for small players and those without strong balance sheets,” he said.
The Copenhagen-based line lost $124 on every 40-foot container it transported compared with a “close to a record” $616 per-box profit in 2010.

This eroded the impact of a 16 percent increase in traffic to 4.2 million 20-foot equivalent units from 3.6 million TEUs, leaving revenue up a modest 4 percent to $7.23 billion.

Nils Andersen, CEO of parent company A.P. Moller-Maersk, blamed excess ship capacity for the “dramatic” and “highly unusual” slump in ocean freight rates in the peak shipping season to levels last seen in the 2009 container shipping slump.

“Everybody was gearing up for the peak season in the third quarter and the peak season didn’t occur,” Anderson said.

The underperforming container business was largely responsible for A.P. Moller-Maersk reporting a bigger-than-expected 78 percent drop in net profit to $371 million, from $1.67 billion in the third quarter of 2010.

The company forecast a full-year net profit of $3.1 billion to $3.5 billion compared with $5.02 billion in 2010 of which Maersk Line contributed $2.64 billion.

Maersk Line’s Asia-Europe traffic soared 24 percent in the third quarter while rates plunged 26 percent. But Anderson denied the carrier is waging a war of attrition on its largest trade lane. “We are not leading a price war … but we are determined to stand firm,” he said.

They just don't get it....

Ocean carriers lost their anti-trust immunity a few years ago.

But, I guess they didn't think the U.S. Government would bother checking
into their activities.

Guess the executives aren't aware that the U.S. Government sent people
to jail a few years ago for collusion.
Anyone remember this?

Tuesday, February 3, 2009
Pleading Stupidity

Back in October, I posted about some people going to jail for anti-trust violations.

This week the first one was sentenced to jail time. In his defense, he pleaded he was only following orders.

Former Sea Star Line executive Peter Baci, the first person sentenced in a federal antitrust investigation of Puerto Rico carriers, claims that he participated in a price-fixing scheme under orders from an official at Saltchuk Resources, a part-owner of Sea Star.

Baci was senior vice president, yield management, at Sea Star until he was fired last year after the federal investigation became public. He was sentenced today to four years in prison, a $20,000 fine and two years of supervised release after pleading guilty to antitrust conspiracy.

The FMC is warning folks...

From The Journal of Commerce

Federal Maritime Commission Chairman Richard Lidinksy says the container shipping industry's trans-Pacific discussion groups are showing "near outright defiance” of a commission's oversight order and warned he'll take action unless he gets timely responses to questions.

Lidinsky's broadside Thursday against the Transpacific Stabilization Agreement and the Westbound Transpacific Stabilization Agreement came after they have “stiff-armed” the commission with “shockingly tardy” responses.

The FMC in September 2010 ordered transcripts of all TSA and WTSA meetings following an investigation of charges the carriers manipulated container and vessel capacity to raise rates in late 2009 and early 2010. The order stands until April 2012.

“We have a situation where a group of shipping lines have been given antitrust immunity to collude to raise the rates that American shippers and consumers pay. ... All we ask in return are some transcripts and minutes – something just about any lawyer gets for simple depositions or proceedings as a routine matter,” Lidinsky said

The groups were given 21 days after a meeting to file a transcript, but FMC General Counsel Rebecca Fenneman said some groups didn’t file transcripts until as much as 28 days after the meeting. Out of 83 transcripts of live TSA meetings or conference calls, 18 were late. Out of 121 meetings by the WTSA, 24 transcripts were late.

The commission also required copies of email exchanges among TSA and WTSA members, and one was a year late. The discussion agreements notified the FMC only once that a transcript would be late.

Fenneman said the late filings appeared to be due to clerical difficulties. Lidinsky agreed, noting some carriers in the agreements individually were “excellent regulatory citizens.”

Ha Ha.