Tuesday, January 26, 2010

CMA CGM Takes $60M Loss on Canceled Vessel Order

European trade publications are reporting that the financially troubled French ocean carrier CMA CGM has reportedly lost a $60 million advance payment made to Hanjin Heavy Industries for a 6,500-TEU vessel the carrier ordered nearly four years ago.

According to the trade publication Tradewinds, the CMA CGM-ordered vessel was recently sold to a Greek shipping firm. The sale price was reportedly in the $40 million to $45 million range, a huge discount on the original $100 million price tag at the time CMA CGM ordered the vessel. The discount amounts to essentially the forfeited advance payment lost by CMA CGM.

The French carrier has been struggling to reorganize billions of dollars in outstanding debt and had been attempting negotiating with HHI to cancel an order of four vessel made with the South Korean shipbuilder in 2006. The carrier has said that it plans to continue taking delivery on larger vessels but has been trying to cancel orders on smaller-sized builds.

Lloyd's List has reported that HHI is using the forfeiture of the $60 million advance to send a message to CMA CGM about honoring its orders. If HHI refuses to negotiate terms on the cancellations, the total loss to the French carrier of advance payments for the four vessels could rise to $240 million.