News / CMA CGM may have to sell a piece of Ceva as it faces limited liquidity options

CMA CGM could be forced to sell a minority stake in Ceva Logistics, barely a year after it took over the operator, as it seeks to reduce its growing debt mountain and improve its liquidity position.

As noted in this week’s Loadstar Premium, the French carrier’s reported core ebit of €1.13bn ($1.28bn) was overshadowed by its annual debt interest bill of €1.39bn.

And the French carrier is now faced with increasingly limited options as it bids to reduce its debt, according to new analysis from Alphaliner today, which noted that “CMA CGM said the current bond prices would not support the issuance of new bonds and it will consider various options to improve its liquidity position”.

The liner shipping analyst said the line’s options to raise cash included: “the sale of remaining unencumbered vessel and container equipment assets that are valued at about $400m; the sale of remaining 17 terminal assets that have not been sold to the China Merchants Ports joint venture; and the sale of a minority stake in CEVA Logistics”.

CMA CGM currently has six bonds issued, for a combined total of $2.9bn, which are due for maturity between September this year and January 2025, while total debt to be repaid within two years amounts to $5.3bn.

“Investor concerns over CMA CGM’s weak liquidity position have seen the price of the carrier’s five-year bonds drop to a low of just 61 cents on the euro, with some $1.2bn of its outstanding bonds coming due in 2020 and 2021,” Alphaliner explained.

Loadstar Premium editor Alessandro Pasetti said the bond market was pricing-in a debt restructuring or possible default, but added: “We have seen CMA CGM bounce back many times with creative ideas.”

The possibility of a part-sale of Ceva Logistics was mooted in an interview with CMA CGM chief financial officer Michael Sirat in Loadstar Premium last October.

“Mr Sirat confirmed that CMA CGM would not retain 100% of Ceva’s equity capital, but would retain a majority stake as it was ‘actively’ looking at possible options,” it reported.

According to The Loadstar sources, this could amount to as much as 40% of the unit being hived-off, although market interest has been low in recent months.