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SCMP Reporter

Safmarine & Rennies Holdings, South Africa's largest shipping company, has confirmed one of its units is considering making a bid for Compagnie Generale Maritime (CGM).

   Any decision hinges on a full review of the French state-owned shipper's finances.

  The managing director of the company's Safmarine division in Cape Town, Tony Farr, said: 'No offer has been made at the moment.

   'All that has happened is the French Government has indicated it is prepared to privatise CGM and has invited companies who are interested to consider making a bid.'   The deadline for firm bids is October 3.

  Any offer by Safmarine and its Belgian unit, Compagnie Maritime Belge, would be made through their jointly owned unit, Safmarine and CMBT Lines IV, Mr Farr said.

  The unit, known as SCL, is based in Antwerp.

  'We are looking at the situation but we have not come to any decision as to whether to make a bid. There's still an enormous amount of work and investigation that has to be done,' Mr Farr said.

   'We will do the due diligence exercise and it will only be after that we will decide whether to make a bid.'   Mr Farr said he could not comment on possible price or financing, noting the French Government only last week received approval from the European Union to recapitalise CGM.

  'It's been a hugely loss-making situation and one has to see what the impact of that [recapitalisation] is.'   He said buying CGM would make sense for Safmarine because their operations were complementary.

   Both companies were involved in the north-south shipping trade.

   SCL transports goods from Europe to west and east Africa, India, Pakistan and from South Africa to Europe, the US and Asia, among other destinations.

  CGM's routes include ports along the east coast of South America, the Indian Ocean islands and the Caribbean.

   'If you put those together, it could be an interesting fit,' Mr Farr said.

   'But a lot of water has got to go under the bridge first.'   Safmarine provides bulk shipping and shipping of perishable products and operates an airline-leasing business out of Johannesburg.

  SCL accounted for about 60 per cent of its total business, Mr Farr said.

  The French Government last Tuesday opened the bidding for CGM, which it hopes to sell in one piece to one or more buyers by the end of the year.

  Compagnie Maritime d'Affretement, a shipping company based in the southern French port of Marseille, also expressed interest in CGM.

  Analysts said they did not expect CGM to fetch a high price because there was no guarantee it would make money, partly because of its high labour costs.

   If the French Government required bidders to retain a quota of French crewmen, and to register the ships in France - where registration costs are high - prospective bidders might walk away.

  CGM expects its let loss to narrow to 26 million French francs (about HK$40.04 million) this year.



Safmarine unit may bid for France's CGM