PARIS (Reuters) – Shipping group CMA CGM has secured a loan of 1.05 billion euros ($ 1.1 billion) guaranteed to be 70% by the French government as it seeks to strengthen its cash flow during the pandemic of coronavirus, which has hammered international trade.
The loan, guaranteed by a consortium of banks including BNP Paribas BNPP.PA, HSBC HSBA.L and Societe Generale SOGN.PA, has an initial maturity of one year and an extension option of up to five years, Marseille-based CMA CGM said in a statement on Wednesday.
France is offering guarantees to support billions of euros in loans to French companies to help them survive the economic fallout from the new coronavirus.
“This new financing further strengthens CMA CGM’s cash position in order to cope with the uncertainties of the global economy resulting from the health crisis,” said the group.
The private company CMA CGM, controlled by the founding family Saade, said it expected a 10% drop in market volumes in the first half of 2020 compared to the previous year.
A spokesperson added that the group was experiencing a contraction in container transport volumes in line with this market trend.
Maersk, market leader in container transport MAERSKb.CO said on Wednesday he now expects global demand in the sector to contract this year, after previously forecasting 1% to 3% growth, and warned that second-quarter volumes could decline as much as quarter.
CMA CGM said in early March that it expected a limited impact on its operations this year from the coronavirus, as activity resumed in China after a first outbreak there.
The virus has since spread around the world, particularly affecting Western Europe and the United States.
CMA CGM recorded a net loss last year and is working to reduce its debt following the takeover of the Swiss company CEVA Logistics, aimed at expanding its presence in non-maritime transport.
CEVA was facing a downturn in many of the industries it serves, although it is experiencing short-term demand for the transport of medical supplies like masks, including by airlifts between China and the United States. France, said the spokesperson, declining to give an estimate of CEVA’s level of activity.
Reporting by Sudip Kar-Gupta and Gus Trompiz; edited by Jason Neely and Steve Orlofsky