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Thursday, May 28, 2009

German owners set to ink CSAV rescue deal

Patrick Hagen, Hamburg - Wednesday 27 May 2009


GERMAN containership owners were heading for an agreement today to save Chilean line Compañía Sud Americana de Vapores from collapse, just ahead of tomorrow’s deadline.
However, Lloyd’s List understands that some companies do not want to participate in the rescue of CSAV under the given terms.
Owners were asked to disclose their decision by Wednesday night to the steering committee led by Henning Winter, a former member of the managing board of Deutsche Schiffsbank.
The signing of the contracts is planned for tomorrow.
Participants in the negotiations confirmed that most affected German owners had agreed to take part in the effort to prevent the stricken line from bankruptcy.
Their agreement is understood to be a condition for CSAV’s shareholders to back the first capital increase which the line needs for survival.
Shipowners, lawyers and the line have been in negotiations since early April, when CSAV held a meeting in Hamburg at which owners were asked to accept reduced charter payments in exchange for shares in the company.
It remained unclear on Wednesday night whether CSAV’s offer would be affected by the decision of some owners not to support the deal. CSAV had made it a condition that all involved owners take part in the agreement.
CSAV, ranked number 18 in the world in terms of its containership fleet, has 55 ships with combined capacity of 148,000 teu on charter, according to ci-online.
Total fleet capacity now stands at just over 166,000 teu, compared with less than 100,000 teu in 2005.
The ambitious expansion programme of recent years included an order for four 12,600 teu ships and a commitment to charter another quartet of the same size.
Negotiations have not been easy, as owners’ opinions and interests are diverse. The discussions of the last few weeks were described as “intense”, partly because of the time pressure.
Part of the debate revolved round question of whether all owners would be affected in the same way by charter rate cuts, independent of their exposure to the line.
“There were a lot of questions raised and not all owners share all the same interests,” said one participant. 
CSAV was said by participants to have been uncompromising in the negotiations, using its threatened bankruptcy as a bargaining tool.
After last month’s Hamburg meeting, CSAV said it had asked shipowners to contribute $400m to its equity base and claimed the plan had met “a positive response”.
Owners said, however, that they had proposed modifications to CSAV’s offer.
As a number of vessels on charter to CSAV are owned by KG one-ship companies, this raised the question of whether the KG company consisting of individual investors, or the KG house that initiated the KG fund, would receive the shares.
This could result in tax problems, said one manager of a German KG house. Owners and KG houses wanted to negotiate an extension clause allowing them to route the shares to an associated corporation rather than the KG company.
CSAV has nominated international law firm Freshfields as its legal adviser. The rescue package was developed by HSH Nordbank Corporate Financing, the consultancy arm of ship finance giant HSH Nordbank.
Owners had little alternative but to save CSAV, as an insolvency of the line would mean a huge number of vessels spilling over onto stressed charter markets. “Everybody wants to avoid another Lehman effect,” said a manager close to the negotiations.
German owners were represented in the negotiations by Henning Winter, former member of the managing board of Deutsche Schiffsbank, Jan Dreyer, from Hamburg’s law firm Dabelstein & Passehl, and Herbert Juniel, former head of shipowner F. Laeisz. All are very well-known for their maritime expertise.
Meanwhile, CSAV has revised its Euroatlan service, deploying seven 4,000 teu vessels, of which six will be operated by the Chilean line, and including direct calls at Tilbury and Le Havre, in addition to Rotterdam, Hamburg and Antwerp.