PARIS/MARSEILLE, Nov 4 (Reuters) – France-Corsica ferry operator SNCM has suspended payments to creditors and filed for court protection on Tuesday, the first step in the search for a buyer that could take months.
SNCM shareholder Transdev, a transport firm owned by Veolia and French state bank CDC, has tried to sell SNCM for years, but a European Union order last year for SNCM to repay 440 million euros worth of state aid made the ferry operator virtually bankrupt and unsellable.
Putting SNCM under court protection will shield it from the aid claims and allow the court to look for a candidate to take over some of its assets and staff.
It will also allow Veolia and CDC to unwind their Transdev 50-50 joint venture, as water, waste and energy specialist Veolia wants to get out of the non-core transport business by selling part of its stake to CDC.
In 2012, CDC had agreed to boost its Transdev stake to 60 percent, on condition Veolia keep or sell SNCM, but the EU state aid repayment claims in 2013 made a sale impossible under its current legal structure, as bidders want no exposure to it.
Bidders may want to buy some of SNCM’s ships and hire some of its 1,900 staff, but will not acquire the company itself.
“Several potential candidates have expressed their interest,” SNCM spokesman Gregoire Biasini said, adding that there were more than two interested bidders.
Ferry operator Baja Ferries, which in May talked to Transdev about buying its 66 percent SNCM stake, is still in the running.
“We are still interested in buying SNCM’s activities,” said Daniel Berrebi, chief executive of the Unishipping group, of which Baja Ferries is part. He added that Baja is interested in SNCM’s France-Corsica as well as its France-Maghreb lines.
Baja operates in Mexico, Puerto Rico and Dominican Republic.
Sources say Compagnie meridionale de navigation (CMN), part of cold-transport group STEF is also eyeing SNCM. The company was not available for comment.
SNCM and CMN both receive subsidies to insure regular connections with Corsica, but while CMN is profitable, former monopoly operator SNCM has racked up cumulative losses of 250 million euros in the past decade.
The head of Corsica’s regional authority, Paul Giacobbi, said at the weekend that Corsica would be willing to transfer SNCM’s subsidies to a new operator of the France-Corsica line.
Under a 10-year contract signed last year, SNCM will receive 57.5 million euros worth of subsidies until 2024.
But privately owned low-cost ferry operator Corsica Ferries, which has captured some 70 percent of the France-Corsica traffic over the past decade, is disputing that contract in court, arguing it was awarded without a proper competitive procedure.
Corsica Ferries will not bid for SNCM, a spokesman said.
The Marseille court is expected to take two weeks to decide on how to proceed. It could decide on a bankruptcy, but that is seen as unlikely. A court-led search for a bidder for SNCM’s activities could take two to five months, experts say.
That timing is difficult for, Veolia, which in the past two years has deconsolidated Transdev, anticipating a sale to CDC.
Transdev is an international train, tram and bus operator with 2013 revenue of 6.6 billion euros and staff of 86,000, and with it, Veolia looks a lot less like the environment services specialist it wants to be.
Insiders say accounting rules offer some flexibility as to how long Veolia can present Transdev as a temporary asset, but if there is no realistic perspective on a sale, it could be forced to reconsolidate.
“Given the pace at which French courts operate, Transdev will finish 2014 with SNCM in its books,” a source close to the companies said.
Veolia CEO Antoine Frerot said in August he is still keen to sell Veolia’s entire 50 percent Transdev stake to CDC, but CDC has made no comment about new talks.
CDC was not available, Veolia declined comment. ($1 = 0.7995 euro) (Additional reporting by Jean-Francois Rosnoblet in Marseille; Editing by David Clarke, James Regan and David Evans)
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