CSAV, the Chilean container shipping company, said it will invest $570 million in its business, building seven new ships and paying back a $258 million loan at a steep discount.
The company said it will buy seven 9,300-TEU ships that will be built by Samsung Heavy Industries.
When the ships are delivered, the company will increase its owned fleet to 55 percent from 37 percent today and just 8 percent at the beginning of 2011.
The company said it will also prepay a $258 million loan to the American Family Life Assurance Co. (AFLAC) at 46 percent discount, a move it said will “generate a positive result of around $50 million, after netting the loss generated by unwinding the foreign exchange derivative related to this loan. In addition, the Company will also release $25 million in collateral deposits. CSAV will draw a bridge loan of around $140 million with Banco Latinoamericano de Comercio Exterior S.A. to execute this prepayment.”
Oscar Hasbún, chief executive officer of CSAV, said “this important milestone for the company is consistent with the new strategic direction and the restructuring plan finalized during 2012. Additionally, this plan will significantly reduce CSAV financial leverage and will allow the company to acquire large and efficient vessels at attractive prices.”
The investment in new ships “is aligned with the strategic direction of joint operations, search of economies of scale, right proportion of own fleet and cost efficiency," Hasbun said. "Therefore CSAV will be able to maintain the already gained efficiencies further improving the company’s costs structure.”
CSAV said the 9,300-TEU ships will be delivered from the end of 2014 and replace part of the existing chartered capacity.
“These new vessels will significantly improve the fuel-consumption efficiency (main cost of the industry) of the CSAV fleet and will lower vessel-chartering costs; allowing the company to operate one of the most efficient containerships fleet of the industry,” the company said.
It was not immediately clear how the new ships will be delployed. In the past, CSAV has chartered some of its owned ships to Maersk.
Hasbún said the intention of the investment in the new ships is to first and foremost “provide CSAV with the top of the art quality fleet. It is aimed to sustain our already defined consortium strategy and not to put back CSAV on a solo rider sort of strategy.
He said where the 9,300 TEU vessels will be deployed will be determined in consultation with CSAV’s consortium partners, but he noted there are many options within the Latin America region to “upgrade and to consolidate services on this size range.”
The 8,000-TEU ships that were chartered to Maersk are being redelivered this year and will be used, as originally planned in the trade between Asia and the East Coast of South America.
Also, at a meeting of CSAV's board of directors on Wednesday, Francisco Pérez Mackenna was named chairman of the company, succeeding Guillermo Luksic Craig, who died last month at the age of 57. Through its 83 percent stake in the Chilean conglomerate Quiñenco, the Luksic family acquired a stake in CSAV in 2011.
The company also made Andrónico Luksic Craig, brother of the deceased chairman, vice chairman. - Chris Dupin