Deal on NOL container terminals 'may raise $1.4b'

SINGAPORE/LONDON • CMA CGM, the French firm that bought Neptune Orient Lines (NOL) this year, has started a sale of the Singapore shipping company's terminal business in a deal that could raise about US$1 billion (S$1.4 billion), say people with knowledge of the matter.

CMA CGM is seeking a buyer for NOL's container terminals in the United States, Japan and Taiwan, as well as joint ventures in Vietnam, Thailand, China and the Netherlands, the people said. It has asked for first-round bids by next month, one of them said, asking not to be identified as the process is private.

Its 7.75 per cent bonds due in 2021 jumped 2.7 euro cents to 82.5 euro cents on Wednesday, the sharpest rise since August last year.

A sale would help CMA CGM, the world's third-largest container shipping firm, cut debt after its S$3.38 billion acquisition of NOL. It has said it plans to raise over US$1 billion from cost cuts, asset sales and other steps within two years of closing the deal, which was completed last month.

The assets could draw terminal and ship operators and infrastructure funds, said one of those with knowledge of the matter. Selling NOL's terminals could avoid duplication with CMA CGM's own terminals. The firm could sell the assets separately to multiple buyers, the person said. A representative for the firm 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 rise in container volumes.

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A version of this article appeared in the print edition of The Straits Times on October 28, 2016, with the headline 'Deal on NOL container terminals 'may raise $1.4b''. Print Edition | Subscribe