Eimskip saves itself for now

Ever since the financial crisis in Iceland, Eimskip (the Icelandic shipping company founded in 1914) has been trying to stay afloat.

They sold off some of their business in cold storage, some ships, and now they have basically made a deal with their creditors to keep the business running, but the creditors are now, the owners.

• The new business will be owned by the financial creditors of Eimskip which includes The Yucaipa Companies (“Yucaipa”), a US private equity investor as a minority shareholder
• Eimskip sells 49% of Versacold Atlas and gives an option for the remaining 51% to Yucaipa.
• Eimskip sells three reefer vessels in Norway

From Eimskip

17.08.2009
Motion for composition approved by all creditors

-Preserving the company´s operations and safeguarding 1,500 jobs

A meeting of the creditors of Hf. Eimskipafelag Islands (Eimskip) was held today, for the purpose of voting on the Group’s composition proposal.

100% of Eimskip’s unsecured creditors voted in favour of the composition proposal which was therefore approved.

So, who knows what will be the future for Eimskip. Hopefully they will offer their owners enough of a return to keep running as they are.

However, I suspect eventually they will be sold off to some other larger ocean carrier. Perhaps someone specializing in refrigerated transport.

Will Icelandic carrier Eimskip survive?

Back in October 2008 I wrote about Eimskip going belly up due to the financial problems of Iceland.

They are still in business, but even their auditor questions for how long.

Eimskip announced a loss of 648.4 million euros [$836 million] in the year to the end of October mainly due to asset writedowns and a loan guarantee for a failed airline.

Eimskip’s auditor KPMG said this casts significant doubt on “the company’s ability to continue as a going concern” as it may be unable to realize its assets and discharge its liabilities.

Because most of their international shipping business has involved refrigerated cargoes, they are not in as bad of shape as they would have been if their core business was in containers or bulk carriers.

Revenues rose 5.7 percent to 718.9 million euros [$927 million] from 680.3 million euros [$878 million] in the previous year, driven mainly by a big increase in shipping volume in the Baltic and new Asian operations

However, I think all this will do is allow some assets to be sold off, rather than just go bankrupt.

Maybe they can salvage something. Iceland needs transportation to and from their country, especially since all their unemployed bankers have gone back to fishing.

Iceland has a steamship line - for now

I had forgotten Iceland has a steamship line, Eimskip. The article in the
Journal of Commerce quotes some unnamed source insisting their services will remain unchanged.

I guess I wouldn't give my name either if I were making that claim. Eimskip lost money in the 3rd quarter of 2008, and their shareholders owned a good chunk of the bank that just went belly up.

Iceland has a population of only 301,000. I don't even know how it got to be it's own country. North Dakota, which I am quite certain is the least populated state in the U.S., has over 600,00 inhabitants.

Anyway, if you happen to have any give-aways with the name Eimskip on them, I would hang onto them.

I expect they will be collectible very soon.