CMA CGM to sell 49% stake in Malta Freeport

The world’s third-largest container line has not disclosed the identity of the buyer, but the disposal must be completed by the end of June; failing which, CMA CGM will be subject to margin increases on part of its debt.

Unconfirmed reports suggest that Danish conglomerate Maersk were in advanced talks with CMA CGM to buy the 49% stake in the Malta Freeport.

The move is reportedly part of a financial restructuring package, which CMA CGM had agreed upon with its creditors last January.

The Malta Freeport is the largest terminal within the portfolio of 27 container facilities in which CMA CGM holds interests. It also acts as one of the carrier’s key strategic terminals, namely as CMA CGMs central Mediterranean hub. The French Lines five primary global hubs are Malta (Central Med), Port Kelang (Straits), Kingston (Caribbean Basin), Tanger Med (Gibraltar Strait) and Khor Fakkan (Middle East).

CMA CGM acquired a 30-year concession to manage the Malta terminal in 2004, through its wholly-owned terminal operating company, Terminal Link. The concession term was extended from 30 to 65 years in 2008. In recent years, Marsaxlokk has undergone a continuous upgrade programme  which enabled the port to handle ships of ULCS dimensions.

In 2004, Austin Gatt – then investments minister – said that the concession would pay the Maltese government some US$421 million in rent and fees over the 30 years. The agreement binds the new owners to invest to improve the equipment according to the growth in container traffic - government had estimated that an investment of US$130 million over five years was needed to keep the port competitive. “The responsibility to ensure competitiveness has now been passed to CMA CGM, which is bound to invest to fulfil this responsibility," Gatt had said.

CMA CGM was also obliged to ensure the port remains a common user facility, allowing different clients to use its services. Malta Freeport handled over 1.2 million containers in 2010, just over half of which were shipped by CMA CGM vessels.

The port, however, suffered a major blow as Iranian shipping line IRISL was hit by EU sanctions. The shipping line’s activities totalled some 10% of the Malta Freeport business.

The Maltese government implemented the EU’s sanctions against Iran by way of a legal notice that effectively froze IRISL’s assets and which prohibited them from using Maltese ports for shipping purposes.

The sanctions, as far as Malta is concerned, relate to some of the number of Iranian shell companies incorporated on the island for the purpose of masking ship and company ownership with a view to circumnavigating a slew of sanctions imposed by the United States, the United Nations and now the European Union over the Persian State’s nuclear controversial programme.

The sanctions effectively froze all the funds and resources assets identified by the European Union as using Malta to covertly continue shipping operations in the face of multilateral sanctions being imposed on Iran.

The legal notice eventually prohibited the loading and unloading in Maltese territory cargo from vessels owned or operated by Islamic Republic of Iran Shipping Lines (IRISL).