French ocean carrier CMA CGM announced Monday that it will carry out a major asset sale program in order to underwrite its acquisition of freight forwarder CEVA Logistics. The line has yet to realize a profit from CEVA, and it acknowledges that it has years of work ahead “returning CEVA Logistics to a sustainable and structural profitability.” It will also use the funds to pay down $900 million of its $11 billion in debt.
Over the course of 2018 and 2019, CMA CGM paid about $1.6 billion to acquire enough CEVA shares to take full control. Since the closure of the acquisition, CEVA has proven unprofitable: it lost $125 million in the last quarter, and CMA CGM now says that it does not expect it to return to profitability until 2023 at the earliest.
About $725 million of the CEVA deal was financed through a bridge loan, which is maturing soon. Most has already been paid down with funds raised in sale-leaseback deals for eight vessels, and CMA CGM hopes to finish repayment via the same means. The carrier is seeking to raise the total amount of its vessel sale and leaseback deals to $860 million, of which $650 million have already been completed.
It plans to raise an additional $970 million by selling stakes in 10 terminal facilities to the CMA CGM-controlled joint venture Terminal Link, which is 49-percent owned by China Merchants Port Holdings, a Chinese state-owned enterprise with strategic port interests worldwide. CMA CGM will retain its 51 percent controlling stake in Terminal Link after the sale, CFO Michel Sirat told Reuters.
Further fundraising efforts include the sale of 50 percent stake in a logistics hub in India and an increase in CEVA’s receivables securitization. Sirat said that this is the full list of CMA CGM’s planned asset sales for the foreseeable future.