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03/12/18 11:07

Sales, charters and offshore towage: here are the details about Moby-CIN merger

Six ships will be sold, loans will be refinanced by 2023, new units will be chartered in and freight rates will be increased

Vincenzo Onorato insieme ai figli Achille e Alessandro

As recently announced by its management while attending a meeting with workers unions, by the end of this year CIN merger in Moby will be finally accomplished.

Based on the deal, 6 units will be sold, new last generation (eco-friendly) ships will be chartered-in, the company will join the offshore towage market, bank loan (expiring in February 2021) will be refinanced and bonds (expiring in February 2023) renegotiated.

In the long-term, the deal aims at “consolidating, as far as possible, the required resources (from a financial, strategic and commercial point of view) in a single body capable to strengthen the new CIN's leadership”, states the company.

Details of the opposite Moby merger in CIN are listed in 2018-2023 plan conceived by Vincenzo Onorato and sons' group to assess whether, after the merger, the new company will have adequate resources to support current financial indebtedness.

Overall 200 million Euro Bank loan liabilities negotiated in February 2016 (50 million of which already refunded), 60 million revolving credit subscribed with a pool of Banks controlled by Unicredit, plus 300 million bonds purchased by institutional investors to be refunded in February 2023 and 7.75% interest rates.

Regarding the upcoming reverse merger, the plan drew up by Moby-CIN clearly pinpoints that “the financing contract and bonds envisage, or at least allow, formalizing the merger.

According to the shipping company this deal should be listed within the so called permitted transaction listed in the accord sealed between Moby, CIN and Unicredit as Agent and warranty agent for Banks and bond lenders. In essence, although the plan states that the operation's fulfilment is subject to no objection submitted by Moby and CIN's lenders, neither banks nor bond holders can hamper the deal, while we still don't know which final decision made Tirrenia's commissioner.

In April 2016 the blue whale's group disrupted the 55 million Euro payment originally due for the purchase of ex state-owned company (negotiated in 2012), while waiting for Brussels' verdict in the investigation started to clarify whether state subsidies granted the company in former years could be seen as state aids.

CIN management believes that the European Commission might ask them to refund former 'state aids' and the related interests. However, according to Onorato, these liabilities “substantially smoothed by the accord sealed between CIN and the Italian Government” which envisages a “deferred payment […] is reduced or cancelled whenever CIN was subject to recovery order”.

Moby's legal representatives, supported by Lawyer Merola of Bonelli Erede legal firm, assessed that, should the European Commission issue negative verdict, the maximum payment would range between 150 and 180 million, while the management evaluated to renegotiate payments as follows: 55 million Euro in 2019, 60 million in 2020 and 65 million in 2021.

Regarding marketing and business development policies Moby-CIN 2018-2023 plan envisages an increase in medium rates charged on freight transport turning into +24% price versus total revenues in 2019, +8% in 2020, +1.2% in 2021 and average +0.5% in the left two years through the reduction of currently applied rebates.

Regarding this fact, the expertise appointed by Milan tribunal, certified public accountant, Vincenzo Masciello, asked Moby's management to “assess the value of the Plan” even in a less favourable scenario.

According to Onorato, considering the new freight rate policy 1.1% decrease in linear metres has been envisaged by 2019, while, based on the envisaged  over-demand versus available market capacity, 8% increase in linear metres is expected as from 2020 and 2% as from 2021.

 

Furthermore Masciello, asked the company's management to evaluate the different oil trend in 2019/2020 term.

The plan also unveils “the offshore business development, by investing in a specially designed tugboat operating in Cagliari area as from January 2019”.

The construction of new tugboats (seemingly built at Damen) was announced by Vincenzo Onorato last summer.

 Moreover, CIN intends selling (in between 2019 and 2021) 6 ro-pax units earning overall 305 million Euro and gaining 145 million profit (respectively 19.9 million in 2018, 75.7 million in 2019, 26 million in 2020 and 23.6 million in 2021).

In parallel, the company will charter-in last generation carriers and passengers ships to strengthen their fleet, seemingly replacing the older units. Overall 30 million Euro were already allocated to install scrubbers on 5 ships by December 31st 2019.

The Blue Whale targets renewing the revolving line after deadline set in February 2021 and renegotiating the whole Senior secured notes in February 2023 through a different tools at 5% annual rate.

The 5-year plan also envisages: deferred payment of state subsidies to 2023, the positive verdict in the appeal against sanction measures launched by the Antitrust investigation reaching 29 million Euro, the renewal of Sinergest concession in Olbia (expired in August 2018) and Livorno Terminal Marittimo (expiring in 2019), renewal of concession for towage services in Sarroch, Oristano and Porto Torres, and finally the deferred investments in Porto Livorno 2000 (after 2023).

Finally, Moby-CIN management confirms the merger between the two companies is suited to support all liabilities.

Still according to the 5-year plan encompassed in the merger project, the new CIN will record 612.9 million Euro revenue, 101 million positive Ebitda and 1.2 million profit, while in 2019 the final result will reach 80.1 million, in 2020 will return to 30 million, in 2021 to 58.9 million, in 2022 to 42.3 million an in 2023 to 48.3 million.

According to Onorato, revenues will constantly grow from 653 to be recorded next year to 740 million in 2023.

Nicola Capuzzo

 

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