Eimskip, the ailing Icelandic ocean carrier, said it will hand over its North Atlantic shipping operations to its creditors in a $2.2 billion restructuring.
Eimskip, the ailing Icelandic ocean carrier, said it will hand over its North Atlantic shipping operations to its creditors in a $2.2 billion restructuring that involves Yucaipa, a U.S. investment group, taking a stake in the company.
Eimskip, which has been hit by failed acquisitions and the collapse of the Icelandic economy, said it plans to create a new shipping and logistics company and exit the cold storage business.
Eimskip simultaneously announced second quarter losses widened to $300 million from $141 million a year ago despite a "marked" improvement in its shipping operations.
The "New Eimskip" will be owned by its creditors, including Yucaipia which is paying $21 million for a 32 percent stake.
The Los Angeles-based investment group is also buying a 49 percent stake in Versacold Atlas, the Canada-based global cold storage business that Eimskip acquired for over $1 billion in 2007 but has been trying to sell since last October to reduce debt.
Yucaipa, which owns the largest U.S. cold storage company, Americold Realty Trust, has an option to buy the remaining 51 percent of Versacold.
Yucaipa, which is controlled by investor Ron Burkle, also has taken over a $168 million secured loan to Eimskip from Dutch bank ABN Amro.
Icelandic bank Landsbanki will own 45 percent of the new company and the remaining 23 percent will be owned by unsecured creditors.
Eimskip said the restructuring will save around 1,500 jobs. It will cut debt from $2.24 billion to around $140 million, ensuring the new company will have a strong balance sheet.
"I believe that this is a vital step in the process to resurrect Eimskip ? and offers the best outcome available to all the creditors of the group," said Gylfi Sigfusson, CEO and president of Eimskip.
Eimskip has further trimmed its shipping capacity with the sale of three reefer vessels to Atlantica Shipping of Norway. The deal will cut debt by $42 million but Eimskip will book a net loss of $246 million.
Eimskip sold its 50 percent stake in Euro Container Lines to Wilson ASA, a Norwegian bulk shipowner, in October. In May, it sold a 65 percent stake in Helsinki-based Containerships, booking a loss of $31 million.
Day-to-day operations of Eimskip's core North Atlantic container shipping and refrigerated logistics including payments to trade suppliers will be unaffected, the company said.
Eimskip operates shipping services on the North Atlantic through Eimskip, Eimskip-CTG, and Faroe Ships.