CMA CGM Creditors Seek CEO Ouster

CMA CGM’s creditors want the carrier to replace founder and CEO Jacques R. Saadé before they restructure the container carrier’s $5.6 billion debt, according to Bloomberg News.

The family-owned company, the world’s third-largest container shipper, is considering demands from lenders including BNP Paribas that it appoint a new CEO and revamp the management board, according to three people who asked Bloomberg not to be named because the discussions are confidential.

Privately held CMA would default on payments if the banks invoked its breach of covenants on $4 billion of the debt. The company is seeking to raise cash by selling stakes to France’s FSI sovereign-wealth fund and other potential equity investors.

The banks want the management changes before agreeing to restructure CMA’s debt, support the search for new investors and help renegotiate some of the 49 ships on order from yards including South Korea’s Hanjin Heavy Industries & Construction Co., the people said. Saade, who could become non-executive chairman, is being urged to give creditors board representation and a veto on decisions, they added.

Ship purchases accounted for more than half of CMA’s $1.2 billion negative cash flow in the first half, leaving reserves of $599 million as of June 30, according to figures circulated among the 63 creditor banks.

BNP had no comment on the debt talks, Paris-based spokeswoman Carine Lauru told Bloomberg. Spokespeople for Natixis, Societe Generale and state- owned Korea Export-Import Bank, which are among CMA’s creditors, also declined to comment.

Jacques R. Saadé released a statement saying, “I have built up this company and we have made it a world leader with close to 17,000 employees.

“The recent economic context has had a significant impact on our operations, as it has on all companies in the maritime sector, but we can already see the signs of a return to break even in the coming months.

“I cannot believe that some of our financial partners would try to take advantage of our current situation, when the company is fully mobilised, when we are on the road to recovery and when the company needs all of the knowledge and experience of all its executive team.“

Several private equity funds have shown interest in buying a stake in the company, Bloomberg’s sources said. CMA also plans to raise several hundred million dollars by selling assets including real estate and minority holdings in other companies, they said.