Standstill Agreement between Moby and Creditors Expired: What Now?

By | 2020 Newsletter week 10 | No Comments

The standstill agreement (with a with a group of bondholders under the €300 million bond due 2023 issued by Onorato Armatori Spa) announced one month ago by Moby, expired on 28 February.

The Milan-based ferry company also said to be engaged in discussions with the banks (Unicredit, Intesa Sanpaolo, Ubi, Banco Bpm and Mps) under the €260 million loan regarding a potential restructuring transaction.

On 2 March, a statement from the ferry company informed that

“Moby and its shareholders have received a proposal from the Ad Hoc Group of bondholders that

  1. is incompatible with the applicable laws of the underlying finance documents,
  2. incompatible with existing operational contracts, and
  3. excessively penalising creditors outside the Ad Hoc Group.”

“The desire of the Onorato Group and the shareholders of Moby is to satisfy all of the outstanding creditors and not to prioritise one subset of creditors. The Company is working with its advisers to find legal solutions that protect the interests of all stakeholders”.

Last week, an invitation was formally sent by the Company to all members of the Ad Hoc Group requesting further negotiations with their advisers regarding a potential restructuring solution.

“The Onorato family, always respectful of the needs of its creditors as well as the implementation of its business plan, has repeatedly reiterated the full availability of the Onorato Group and its shareholders and the firm desire to progress the restructuring negotiations,” the statement further explained.

“The group is committed to an open dialogue regarding the future governance (including the creation of nomination and remuneration committee) of the company with the aim of creating added value for all stakeholders and creating a platform for future growth. The company believes the elements for this restructuring are possible.”

Moby also highlighted that “The value of the group’s fleet, based on the latest Unitramp appraisal and valuation, exceeds € 1 billion. If these valuations are confirmed by the broker to be appointed, the restructuring plan can be implemented based solely on the rescheduling of the current debt profile.”

The big question now is: will the banks and the bond holders be patient with Moby or opt for a more aggressive approach as was the file for bankrupt proposed last autumn?

State Aid: Commission Launches In-Depth Investigation into Public Service Delegation Contracts for Maritime Services to Corsica

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The European Commission has launched an in-depth investigation to determine whether the public service delegation contracts for maritime services to Corsica awarded in June 2019 are in line with EU State aid rules.

Maritime services between Corsica and mainland France run between three mainland ports (Marseille, Toulon and Nice) and five ports in Corsica (Ajaccio, Bastia, Porto-Vecchio, Propriano and Ile Rousse). The French authorities awarded Corsica Linea three public service delegation contracts for the routes between Marseille and Ajaccio, Bastia and Ile Rousse, for the period from 1 October 2019 to 31 December 2020.

The Commission takes the preliminary view that these three contracts constitute State aid since, at this stage, they do not meet any of the cumulative criteria for excluding State aid set by the European Court of Justice in its judgment in the Altmark case.

Furthermore, the Commission has not yet ruled out that the public service compensation received by Corsica Linea may give it an undue advantage over its competitors, in breach of the EU rules on services of general economic interest (SGEI).

The Commission has doubts, in particular, with regard to:

  • whether the scope of the three contracts awarded meets a genuine public service need. In particular, the Commission doubts the necessity of including passenger transport in the public service contracts, given the presence on the market of a significant source of commercial supply from the neighbouring port of Toulon.
  • the obligations in the public service contract that do not appear to be necessary or proportionate to the provision of public maritime services: (i) the requirement for a specific type of fleet to be used on certain routes; (ii) the automatic exclusion of Toulon and Nice as possible mainland home ports for public service.
  • whether the compensation parameters could lead to the over-compensation of Corsica Linea as a result of a misallocation of costs between the company’s public service and commercial activities.
  • whether the award procedure for the three contracts complied with EU rules on public procurement, since France was able to apply selection criteria and technical specifications differently for the various tenderers.

The Commission now intends to investigate whether or not its initial concerns are justified. The launch of an in-depth investigation gives France and all interested parties the opportunity to put forward their comments on the measures in question.

Corsica Ferries versus Collectivity of Corsica: No Money Yet

By | 2020 Newsletter week 10 | No Comments

In 2017, the Administrative Court of Bastia condemned the Collectivity of Corsica to pay €84.3 million to Corsica Ferries. It is a compensation for the so-called “complementary service”. This was an illegal financial system which was given to SNCM, as compensation for the extra passengers in high season, on top of the DSP contract.

Corsica Ferries’ request to enforce this 2017 judgment was rejected on Monday 2 March 2020 by the Marseille Administrative Court of Appeal.

Compensation will eventually be paid by the Collectivity of Corsica to Corsica Ferries, but apparently the judge decided there was no rush.

Sources: Le Marin, Corse-Matin

Worries Caused by Interruption of Ferry Service between Corsica and Sardinia

By | 2020 Newsletter week 8 | No Comments

On 6 February, Moby Line’s GIRAGLIA hit a rock. She had to be repaired and left the route between Sardinia and Corsica without a ship for 10 days.

It is a vital logistic link between the two islands. The other ship, BASTIA, was not available due to winter maintenance. She is expected back soon.

The incident raised concerns:

  • How long can this old tonnage remain in service? GIRAGLIA is from 1981, BASTIA from 1974.
  • Since 2016 talks have been going on about the creation of an inter-island, inter-European public service contract (GECT – groupement européen de coopération territoriale), so far without anything concrete.

La Mériodionale: Now Hoping For The Two Remaining Ports, Focussing On The Next 10-Year Long DSP

By | 2019 Newsletter week 27 | No Comments

Based in Ajaccio, the Corsican Assembly (L’Assemblée de Corse) is the unicameral legislative body of the territorial collectivity of Corsica. Last week, on 27 June, it took the decision concerning the attribution of the DSP (delegation of public service) for the five ferry lifelines between Marseille and Corsica.

  • The contracts for Bastia, Ajaccio and Ile Rousse have been given to Corsica Linea.
  • The tender for Propriano and Porto-Vecchio has been declared unsuccessful and needs another decision. A new tender procedure for these two smaller ports will be started imminently. Either La Mériodionale could get these, or Corsica Linea. In the latter case, Corsica Linea would have a monopoly position on the DSP.

So far, it means that La Meridionale does not have any DSP-subsidised route. That’s why they were on strike for several days. However, the strike ended as a possible partnership with Corsica Linea is in the making. The actual DSP starts in October, and is only for 15 months. It is a test to redefine the needs of the customers. The next DSP will be for a duration of 10 years. La Meridionale wants to make sure not jeopardise any chance of participating at this decade-long DSP, eventually by partnering up with the company with the red ferries.

Corsica Linea to charter Grimaldi Ro-Pax

By | 2018 Newsletter Week 17 | No Comments

o charter Grimaldi Ro-Pax

French company Corsica Linea has agreed to charter the Grimaldi Lines’ ro-pax EUROFERRY CORFU, better know as the 1999-built FINNEAGLE.The vessel will start to operate on Marseille – Sardinia – Tunisia – Algeria as from mid June. The charter is for five years.

In 2017 Corsica Linea transported 568,000 passengers and 1.1 million lane metres of freight, which is a huge increase compared to the year before.Already 200,000 pax have been counted on the Maghreb routes. With the extra vessel the company wants to grab the opportunity to increase this number.

According to French TV France 3 (on YouTube) Corsica Linea seems to have approached La Meridionale, with an offer to merge the two companies. However La Meridionale’s CEO Francis Lemor (Groupe STEF, owner of La Meridionale) said the company is not.

IN THE MEDIA

By | 2018 Newsletter Week 17 | No Comments

Delay For Corsica’s Own Regional Ferry Company

Corsica had the intention to start its own regional ferry company. The idea was to acquire two former SNCM ferries, PAGLIA ORBA and MONTE D’ORO.

On April 25 it was decided not to acquire these two ferries, because they would not respect the environmental rules in 2020. Acquiring the would create a financial risk, is the conclusion.

Source: France 3 (in French)

Photo: Mike Louagie

The Corsican Community Will Have To Pay Compensation To Corsica Ferries

By | 2018 Newsletter week 08 | No Comments

The Marseille Administrative Court of Appeal upheld the judgment of 23 February 2017, recognizing the injury of Corsica Ferries, reports Corse Net Infos (in French).
The subject of the dispute was the aid paid between 2007 and 2013 to the former SNCM and the CMN.
On February 23, 2017, the Bastia Administrative Court had ordered the Collectivité de Corse (CTC) to pay € 84.3 million to Corsica Ferries in compensation for the damage caused by the payment of subsidies. This aid, considered illegal, made it possible to provide an additional service for the transport of passengers during peak periods within the framework of the DSP (Delegation of public service).
Corsica Ferries, then, seized the European Commission and obtained, in April 2016, the cancellation of the DSP.
In a judgment delivered on February 15, the Administrative Court of Appeal of Marseille confirms the payment of indemnities.
Satisfied with the judgment, Pierre Mattei, CEO of Corsica Ferries, sees two mistakes committed by the CTC.
1) Illegal subsidies in 2007.
2) In 2013, when it did nothing to recover the € 220 million in illegal aid received by SNCM that should have paid back.
It will now be a question of precisely assessing this damage. The CTC already announced to accept the verdict.

More passengers and more freight for Corsica in 2017

By | 2018 Newsletter week 06 | No Comments
  • ORTC (Observatoire Régional des Transports de la Corse) published the first statistics for the year 2017. Some highlights:
  • Total of ferry passengers: 4,144,614 (+2.1%)
  • Total of airborne passengers: 4,025,727 (+9.7%) from which 241,744 came with low-cost flights.
  • Several ports, both in Corsica and on the Continent saw a progression in passenger traffic. Ajaccio +5%, Bastia +2%, Marseille +8% (but Nice -9%), Genoa +14%.
  • The ferry port of Porto Vecchio and the airports of Ajaccio, Bastia, Calvi and Figari have set new records.
  • On the ro-ro freight side, most ports saw an increase. Only Toulon, on mainland France, went down -8%. Marseille is the most important mainland French port for freight.
  • Corsica Linea is the biggest freight carrier, and saw month after month a steady increase. Second is La Meridionale, followed by Corsica Ferries.

All statistics can be found on the old-style (and in French) ORTC website under ‘publications’.

Photo: Mike Louagie

FERRY PORTS

By | 2018 Newsletter week 06 | No Comments

Port of Marseille Fos set to build on 2017 growth

From the many 2017 figures from Port of Marseille Fos we highlight the ones relevant for the ferry industry.

  • An 11% increase in ro-ro volumes – led by 202,000 trailers on Corsica and North Africa trades.
  • Passenger carryings on Corsica and North Africa ferry services rose 7% to 1.2 million.
  • New project expenditure included €14.6m to enlarge the Marseille harbour area’s Passe Nord access for cruise and ferry vessels, a €2.5m ferry terminal upgrade and the €2.3m installation of an 800-tonne capacity project cargo ro-ro ramp in Fos – the largest in France.
  • Environmental initiatives, including further ‘cold ironing’ facilities for ferries, reduced port dues for ‘green’ vessels under the Environmental Ship Index and membership of the LNG Focus Group – following the MoU signed last July – under which major world ports are working to promote LNG as a marine fuel.