Transdev Sees Return to Profit, Ferry Unit Blocks Veolia Deal

Maritime Activity Reports, Inc.

April 9, 2014

French transport firm Transdev expects to return to profit this year, but sees no quick solution for its troubled Mediterranean ferry unit SNCM, which is blocking a reshuffle in Transdev shareholdings between Veolia and state-owned bank CDC.

Transdev's 2013 net loss narrowed to 130 million euros ($179 million) from a restated 391 million loss in 2012. The loss was mainly due to 107 million euros worth of writedowns related to SNCM, which runs ferries between Corsica and mainland France.

At the presentation of the firm's 2013 earnings, Transdev CEO Jean-Marc Janaillac said a partial sale of Veolia's 50 percent stake in Transdev to its joint-venture partner CDC remained conditional on the sale of Transdev's 66 percent stake in SNCM, as CDC does not want to take it over.

Norway's Siem Shipping confirmed earlier this month it was in talks with Transdev about a possible acquisition of SNCM, but Janaillac declined to comment on these talks.

He added that Transdev was willing to sell SNCM for a symbolic sum and to abandon its 77 million euro claim against the ferry operator in order to facilitate a takeover.

Janaillac - like Veolia and CDC before him - said Transdev would not put any more money into SNCM and said its long-term business plan was not credible.

"We do not believe in SNCM's strategic plan, as it is based on forecasts that are too optimistic about traffic growth," Janaillac said.

He added that at the moment nobody had found a credible legal solution for European Commission's request for SNCM to repay two chunks of state aid.

"This is a lethal menace for the company (SNCM)," he said.

Last year, the European Commission ordered France to recover 440 million euros in illegal state aid from SNCM. The French state is appealing that order.

Late in 2012, Veolia agreed to sell a 10 percent Transdev stake to CDC, which would make CDC the leading shareholder with a 60 percent stake. Veolia has said it wants to reduce its stake further to 20 percent as it focuses on its core water, waste and energy businesses.

But the deal was conditional on Veolia taking SNCM out of Transdev and lapsed in October 2013.

The stalemate over SNCM is an irritant for the French government and has become a factor in the leadership challenge faced by Veolia CEO Antoine Frerot.

CDC, Veolia's largest shareholder with an 8.85 percent stake, last month abstained in a boardroom vote to renew Frerot's CEO mandate, following an attempt to oust Frerot.

The French state, which also has a 25 percent direct stake in SNCM, provided SNCM with a 30 million euro loan late last year and is keen to find a solution that protects the 2,600 jobs at the company ahead of European elections in May.

Legal experts say putting SNCM under court protection is the only way to shield SNCM from the European Commission's claim, but SNCM's management and unions reject that option.

($1 = 0.7249 Euros)

(By Geert De Clercq; Editing by Mark Potter)

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