CSAV survival hangs on cancellation of orders

The survival of embattled Chilean shipping group CSAV could rest with South Korean shipbuilder Samsung Heavy Industries after German owners attending crisis talks in Hamburg last month attached conditions to a rescue plan.

International efforts to save the line depend in part on the cancellation of an order for four 12,600 teu ships, but so far Samsung is refusing to tear up the contract signed two years ago. “We cannot under any circumstances accept cancellation of these orders but we are prepared to be flexible on payment deferrals. We are still in negotiation with the owners, so we can add nothing further at this stage,” a source at the company said.

The deadlock followed a secret meeting in Hamburg in early April, to which about 20 representatives of some of Germany’s top shipowners were invited by HSH Nordbank’s consultancy arm HSH Corporate Financing, which is advising CSAV.

Peter Döhle placed the order at the height of the boom in April 2007, with CSAV later agreeing to purchase four and charter the other four. Steel-cutting is thought to have started on at least one, and Samsung has made it clear that it will not revoke the contract. German owners have a strong interest in making sure that CSAV survives, as many of their vessels would be unemployed.

An emergency meeting was also held in Valparaiso last week, at which CSAV’s managing director Juan Antonio Alvarez and chairman Jaime Claro spelled out the details of the company’s restructuring plan to shareholders as the scale of the task ahead has become more apparent.

The embattled Chilean shipping group, which operates in the container, reefer, general cargo, chemical and car carrier trades, has already taken important steps to rationalise its operations, axing 660 jobs, 60 in Chile and the rest throughout its global office network.

Those attending the meeting were also told that while there was still no agreement in negotiations concerning the capitalisation of charter party contracts and the cancellation of newbuilding orders, talks were “moving in the right direction”.