CSAV to Book $50 Million Gain in Debt Prepayment

CSAV to Book $50 Million Gain in Debt Prepayment

CSAV said it will prepay a $245 million loan at a 46 percent discount in another move signaling the financial turnaround of the Chilean ocean carrier.

The prepayment of the debt to the American Family Life Assurance Co. will generate a positive result of around $50 million, after netting the loss from unwinding foreign exchange derivatives attached to the loan, and release collateral deposits of $25 million, the carrier said.

CSAV also is drawing a bridge loan of $140 million with Banco Latinoamericano de Comercio Exterior to execute the pre-payment.

The carrier simultaneously announced its directors had approved a $570 million order for seven 9,300 20-foot-equivalent unit container ships to be built at Korea’s Samsung Heavy Industries, with delivery beginning at the end of 2014.

CSAV plans to finance the order with 40 percent equity — about $230 million — and the remainder with debt.

The company has called a special shareholders meeting on April 29 to propose a capital increase of $500 million to finance the order, the debt prepayment and its ongoing development plans.

This will significantly reduce CSAV’s financial leverage and allow it to acquire large and efficient ships at attractive prices, said Oscar Hasbun, CSAV’s chief executive.

CSAV finalized a two-year financial restructuring in 2012 that included a $1 billion recapitalization and a downsizing of its chartered fleet and route network that helped cut losses to $314 million last year from a record $1.25 billion in 2011.

The carrier, which is now focusing on Latin American routes, received a $700 million cash bailout in 2009 from German shipowners who acquired a minority stake in the company in exchange for cutting charter rates.

Contact Bruce Barnard at brucebarnard47@hotmail.com.