CMA CGM`s Global Ship Lease loses US$11.7 million, hit by wrong-way hedge

NEW YORK-listed containership owner and charterer Global Ship Lease said that charters ships to its parent CMA CGM, said scheduled drydockings and non-cash charges caused a second quarter net loss of US$11.7 million, up from $5 million a year ago. Revenue slipped to $38.8 million from $39.6 million.

Operating profit declined to $25.7 million from $27.4 million earlier, mainly due to reduced revenue and increased costs as a result of planned drydockings, reported Newark`s Journal of Commerce. The loss resulted from a $13.6 million non-cash impairment charge related to fair market of purchase options and a $3.8 million non-cash interest rate derivative mark-to-market loss.


Had it not been for the impairment and derivatives losses, net income would have been $5.8 million, down from $7.5 million a year earlier, said the company.


"Although we are seeing a slowdown in the recovery of containerised shipping, our business model insulates us from the direct impact of volatile freight markets," CEO Ian Webber said.


"With EBITDA of $25.7 million for the second quarter, our 17 long-term, fixed-rate time charters continue to generate consistent, stable and predictable cash flows," Mr Webber said.


The company said its vessel charters have an average remaining term of 8.8 years on a weighted basis and provide a contracted revenue stream of $1.3 billion.


Mr Webber said Global has no purchase obligations and has paid $90.1 million of debt since August 2009, including $23.9 million this year.


Global Ship Lease was formed in 2007 to acquire a fleet of a dozen containerships from its parent, CMA CGM, and then lease the vessels back to French shipping giant - a cost-saving alternative to direct ownership.


In 2008, CMA CGM sold a major stake in Global Ship Lease to Marathon Acquisition, a publicly traded "blank check" company. The combined company took the Global Ship Lease name. The fleet, which is solely chartered to CMA CGM, comprises about 20 containerships, from 2,200 TEU to nearly 11,000 TEU, with a total capacity of 66,000-plus TEU.