Since announcing its financial results last week for 2009, CMA CGM has confirmed that its shareholders have been told to expect more losses from newbuild cancelations. A total of USD200 million has been included in its exceptional provision of USD548 million in 2009 for non-recurring exceptional items to cover the possible loss of deposits already paid on orders, including a contract for 12 x 3,600TEU vessels placed with Hanjin Subic Bay.
The message is clear - shipyards either have to become more flexible over delivery dates and loan-to-value renegotiations, or accept the consequences of more cancellations. The company never-the-less recently remained silent over its outstanding debt obligations concerning an order for 4 x 6,500TEU placed with Hyundai Heavy Industries in August 2006.
The first vessel was paid for and delivered on time, but the second had to be sold at a distressed price, thereby losing CMA CGM its deposit, reported to be around USD60 million. The shipyard threatened to sell the third if full payment was not received by February 23, 2010. Although it is understood that a solution was subsequently found, nothing has subsequently been confirmed.
CMA CGM's desire to clarify what is included in its special provision of USD548 million for last year coincides with its desire to progress negotiations with prospective new shareholders for the injection of between USD300 million and USD500 million of fresh capital.