France’s CMA CGM SA plans to raise around $2 billion by the middle of next year through a series of deals in its shipping operations to finance the recent acquisition of Ceva Logistics, reports Reuters.
Terminals sell out
The container shipping giant said that it will get about $969 million from the sale of its stake in 10 port terminals to Terminal Link, its joint venture with China Merchants Port Holdings Co. Ltd., an arm of Chinese government-owned China Merchants Group.
The joint venture has stakes in 13 port terminals world-wide.
Ship sale and lease-back deal
CMA CGM, the world’s fourth-largest container operator, is also raising about $860 million from a ship sale and lease-back deal. Another $93 million will come from the sale of its stake in a logistics hub in India.
The company bought Switzerland-based logistics operator Ceva for $1.7 billion in April in a move to diversify its business by gaining more revenue from inland logistics.
CMA CGM said the Terminal Link deal will be financed by a $468 million capital increase by the joint venture, funded by China Merchants Port, and a loan from China Merchants Ports.
The loan will be converted into a capital increase in which CMA CGM will subscribe in eight years.
Concerns over balance sheet
Shipping executives and analysts have raised concerns over CMA CGM’s balance sheet since the Ceva deal.
Moody’s Corp. in September downgraded the company’s debt to B2 from B1, and its outlook from stable to negative, saying the cost to buy and restructure Ceva “will continue to put pressure on the company’s liquidity profile.”
CMA CGM is trying to turn around Ceva, which employs more than 60,000 people and lost $44.4 million in the third quarter. CMA CGM as a whole made a profit of $45 million for the period.
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