Troubled CSAV Fights Back
Troubled Chilean Shipper Progressing Towards US$750 Million bailout
Apr 14, 2009
Embattled Chilean shipper CSAV (Compania Sud Americana de Vapores) said on April 14 it is making progress towards a US$750 million refinancing programme and has expressed long term confidence about its future.
The company currently slogging its way through a perfect storm of falling revenues, credit downgrades and losses made the comments in a statement issued April 14th and available on the CSAV.com website. This in itself is an eye-brow raising move. The shipper, South America’s largest usually declines any contact with the press.
Visits Hamburg to See Banks and other Stakeholders
Discussions with shipowners, ship-financing banks and shipyards to address the issues and held the week beginning April 7 Hamburg "went very positively and in a highly constructive way," said CSAV in an April 14 statement. The company had decided to expand its equity base by asking its shareholders for an additional equity injection of US$220 million on top of the US$130 million currently being implemented.
Ship-owners have been asked to contribute US$ 400m to the equity base of the company. "Such a plan has found positive reception and details of such a proposal are currently being worked out. CSAV expects to formalize an agreement in due course," said the April 14th statement.
The Chileans have met other business partners such as shipyards to negotiate on the current new building program. It said it is confident that as part of the overall restructuring process, agreements will be made with the shipyards as well in due time
Interestingly and maybe even worryingly for the market a senior source at Vapores, chief executive officer Juan Antonio Alvarez had counseled caution the day before. “While these are advanced conversation, the respective agreements haven’t been signed and there is no guarantee that they will be signed,” he said in a report carried by the Bloomberg news agency.
Fightback as Ratings Downgraded
The move though marks another part of the fightback by CSAV who recently had another ratings agency, this time with Standard and Poor’s, downgrade. The Valparaiso-based shipper’s debt went from BB- to B- and was kept on a negative creditwatch.
“We expect CSAV to continue posting significant losses that would challenge its credit quality by further eroding its operational performance, its financial risk profile, and that could lead the company to delay payments to lessors,” said S&P in an April 2nd research note.
This it goes on to say could have major ramifications for Vapores as “Failure to get substantial capital inflows in the first half of 2009 (ie a lower-than-expected or delayed capital infusion would likely result in additional downgrades” the research added.
Nor was Standard and Poors the only one on March 17 Fitch relisted the shipper at BBB (down from A) whilst on April 1 Humphreys reduced it to A- from A+.
