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  • mkyhhd mkyhhd Dec 20, 2009 9:50 AM Flag

    CMA CGM revamps to access $500m

    CMA CGM revamps to access $500m
    Robert Wright. Financial Times. London (UK): Dec 19, 2009. pg. 9

    (Copyright Financial Times Ltd. 2009. All rights reserved.)

    Industrial transport

    The founder of CMA CGM is to be removed from day-to-day management control over the world's third-largest container shipping line in a governance overhaul agreed to gain access to a badly needed $500m credit facility.

    CMA CGM, based in Marseilles, said the changes, announced yesterday , would allow it to pursue discussions about a comprehensive restructuring of its debt and prepare for investments from outside the founding Saade family.

    Jacques Saade, who founded the company in 1978 and currently chairs its executive board, will call an extraordinary share-holders' meeting for December 23 to set up a new administrative board, which he will head.

    Philippe Soulie, a veteran French businessman who currently runs Cnim, a Marseilles-based construction company, will take over as chief executive. Denis Ranque, a former chief executive of Thales, the defence company, and Christian Garin, president of the French shipowners' association, will also join the administrative board, in a sign of the French establishment's determination to shore up the line.

    In September, CMA CGM became the largest of several container lines to announce plans to restructure after a collapse in earnings brought on by falls in traffic volumes and overcapacity. CMA CGM, which had been one of the industry's fastest-growing companies, lost $515m net on sales of $4.8bn in the first half of this year.

    The governance changes appear to have been a condition of its creditor group's continued support while details of a restructuring plan were worked out. The company's financial partners had sent out a strong message by reaching the preliminary agreement with the company, Mr Saade said.

    "Our strategy to return to profitable growth is proven to be valid," he said.

    Management control had until now been entirely in the hands of the Saade family and other members of a small group around Mr Saade, 72. Mr Soulie will work alongside three current senior executives - Rodolphe Saade, who is Jacques Saade's son; Farid Salem, and Jean-Yves Schapiro. The three will be named as deputy chief executives.

    The new credit facility will be made available during January.

    As part of the restructuring, CMA CGM would pursue talks with South Korean shipbuilders about either cancelling or delaying delivery of some of its programme of ship orders, one of the industry's largest, it said.

    The company is also known to have discussed with specialist owners of some of the container ships it charters about cutting their charter rates.

    Mr Saade founded Compagnie Maritime d'Affretement in 1978 after fleeing Lebanon's civil war. The company subsequently took over state-owned Compagnie Generale Maritime.

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    • The flagship line close to the French establishment
      Robert Wright. Financial Times. London (UK): Dec 19, 2009. pg. 16

      (Copyright Financial Times Ltd. 2009. All rights reserved.)

      The appointments at CMA CGM yesterday and the events leading up to them illustrate how important the shipping line, founded by a refugee from Lebanon, has become to France's political and business establishment, writes Robert Wright.

      Philippe Soulie, who is to take over as chief executive, is a typical product of the upper echelons of French business. A graduate of the elite Ecole Polytechnique who also holds an MBA from France's Insead business school, he has spent much of his career with Alstom, France's leading industrial company.

      Denis Ranque, a former chief executive of Thales, the defence company, who will become a member of the new administrative board, is also a significant figure from French business.

      The French state showed its close interest in CMA CGM's fate by hosting many of the restructuring talks at the finance ministry.

      There is a widespread expectation that the state may play a role in the eventual restructuring of the company's finances next year - possibly through an investment by the country's sovereign wealth fund.

      The company has had close links to the government ever since it took over state-owned Compagnie Generale Maritime in 1996. It is now one of the biggest employers in Marseilles and seen as a flagship for the country's maritime sector.

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