CMA CGM announced today it has finalized a debt restructuring agreement with its banks that will stabilize its financial position and ease the way to an initial public offering of the world’s third-largest ocean container carrier.
The French carrier also finalized earlier agreements with Turkey’s Yildirim Group and France’s sovereign investment funds for a $250 million equity injection.
The banks have agreed to modify the terms of the French carrier’s $4.6 billion net debt to reflect the volatility of container shipping, with the financial ratios it must satisfy linked to its assets and not its operating profitability.
CMA CGM said the agreement also would partially reschedule a credit line expiring this year into new three-year secured loans worth 280 million euros ($378 million).
The agreement, which took nearly a year to negotiate, comes weeks after the privately owned carrier sold a 49 percent stake in its Terminal Link port unit for 400 million euros ($540 million) to Hong Kong-based China Merchants Holding as part of an asset disposal program pressed by its banks.
CMA CGM simultaneously finalized a binding agreement with Fonds Strategique d’Investissment, France’s sovereign investment fund, to invest $150 million within three months in a convertible bond equivalent to a 6 percent equity stake.
The company also announced the closing of a subscription, under an existing agreement, by the Yildirim Group of $100 million in redeemable bonds, worth 4 percent of the carrier’s equity. The Turkish group already has a 20 percent stake in CMA CGM following a $400 million investment in 2011 that helped the carrier survive a financial crisis.
“The finalization of the debt restructuring combined with new equity injection from FSI and Yildirim Group and the sale of 49 percent of Terminal Link will allow CMA CGM to operate with the required financial flexibility,” said Rodolphe Saade, CMA CGM’s executive officer.
The agreements also are “key milestones before contemplating an IPO,” he said.