CMA CGM said to seek US$1b Neptune Orient terminal sale

[SINGAPORE] CMA CGM SA, the French company that bought Neptune Orient Lines this year, has started a sale of the Singapore shipping company's terminal business in a deal that could raise about US$1 billion, according to people with knowledge of the matter.

CMA CGM is seeking a buyer for Neptune Orient's container terminals in the US, Japan and Taiwan, as well as its joint ventures in Vietnam, Thailand, China and the Netherlands, the people said.

It has asked for first-round bids by next month, one of the people said, asking not to be identified because the process is private.

The French shipping company's 7.75 per cent bonds due in 2021 jumped 2.7 cents on the euro to 82.5 cents on Wednesday, the sharpest increase since August last year.

A sale would help CMA CGM, the world's third-biggest container shipping company, cut debt after its December offer to acquire Neptune Orient for S$3.38 billion amid a glut of capacity, declining demand and lower rates.

The Marseille-based company has said it intends to raise more than US$1 billion through steps including cost cuts and asset sales within two years of closing the deal, which was completed last month.

The assets may attract interest from terminal and ship operators as well as infrastructure funds, according to one of the people with knowledge of the matter.

Any sale of Neptune Orient's terminals could avoid duplication with CMA CGM, which has 13 terminals in countries including the US, France, Egypt and Vietnam, according to its website. CMA CGM could sell the assets separately to multiple buyers, the person said. A representative for CMA CGM declined to comment.

A prolonged slump in shipping lines is weighing on earnings as container lines struggle to raise fees after a boom in Chinese shipbuilding led to a capacity glut. CMA CGM reported in March that full-year revenue dropped 6.4 per cent to US$15.7 billion, even with a 6.3 per cent increase in container volumes.

BLOOMBERG