French container shipping giant CMA CGM plans to sell selected port terminals, ships and other assets to raise roughly $2 billion to finance its acquisition of CEVA Logistics, according to Reuters.
Chinese state-owned conglomerate China Merchants Port has entered into a Memorandum of Agreement (MOA) with CMA CGM to acquire interests in a portfolio of 10 terminals from the French container line and its affiliates via Terminal Link for a total consideration of $955 million.
As part of the deal, China Merchants Port will buy as much as $468 million of convertible bonds issued by the joint venture, Terminal Link, and will loan as much as $500 million to CMA CGM.
CMA CGM 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.
According to sources, the deals would also help CMA CGM to ease liquidity pressure. Its debt burden has increased with expansion over the past 12 months, including the $1.7 billion acquisition of loss-making Ceva Logistics and the Finnish regional line Containerships.
CMA CGM’s debt stood at $19.9 billion at the end of March, according to shipping-research organization Alphaliner.
Terminal Link is a joint venture (JV) between China Merchants Port Holdings (49%) and CMA CGM. Terminal Link currently owns and operates 13 container terminals worldwide. It posted a net profit of 22.98 million euros ($25.3 million) for the first half of 2019.
China Merchants Port operates business of investment and operation of port and port-related business. The company has been actively on exploring acquisition opportunities overseas in recent years to achieve business growth.