UPDATE 2-Veolia's Transdev in talks with Siem about SNCM sale

Tue Apr 1, 2014 1:34pm EDT

Related Topics

* Transdev says deal depends on solution for state aid claim

* EU wants SNCM to repay 440 million euros in state aid

* Siem Shipping confirms talks, says no further comment (Adds second letter, Siem comment, background)

By Jean-Francois Rosnoblet

MARSEILLE, France, April 1 (Reuters) - French transport firm Transdev is in talks with Norway's Siem Shipping about the sale of its stake in ferry operator SNCM, Transdev said in a letter to the transport ministry.

In the March 30 letter seen by Reuters, Transdev - jointly owned by water and waste group Veolia and French state-backed Caisse des Depots et Consignations (CDC)- said a sale would depend mainly on finding a solution for the state aid that the European Commission wants SNCM to repay.

The Commission has ordered France to recover 440 million euros ($607 million) in state aid from SNCM, which runs ferries between Corsica and mainland France. France is appealing the ruling.

"The talks are conducted in good faith and with the will to come to an agreement soon," Transdev CEO Jean-Marc Janaillac wrote to French Transport Minister Frederic Cuvillier.

He did not indicate what kind of solution could be found for the EU order. A forced repayment could push the Marseille-based firm into bankruptcy and put its 2,600 jobs at risk.

In a March 31 letter from Cuvillier to SNCM's unions, also seen by Reuters, Cuvillier said the French state would do all it can to help find an industrial shareholder for SNCM.

"There has been a contact ... we are not at a stage where we can make any comment," Kristian Siem, founder, director and chairman of Siem Industries - the owner of Siem Shipping - told Reuters. He declined to give further details.

On its website, Siem said that in 2012 it had changed its name from STAR Reefers to Siem Shipping to reflect a broader interest in an expanded range of shipping opportunities.

Siem says it is a leading global owner and operator of refrigerated vessels, with a fleet of 33 "reefer" vessels that transport perishable produce, notably bananas.

BLOCKAGE

Janaillac wrote that nothing in Societe nationale Corse Mediterranee's (SNCM) financial situation would warrant putting SNCM under court protection.

Veolia CEO Antoine Frerot has said that finding a viable solution for the Mediterranean ferry operator would mean putting SNCM under court protection to shield it from the aid repayment claim. Frerot has also said that Veolia cannot be held liable to repay the aid and will not put more money into SNCM.

At the end of December, the French state has advanced loss-making SNCM another 30 million euros.

Veolia could not immediately be reached for further comment.

Transdev owns 66 percent of SNCM. The French state also has a direct stake of 25 percent and its employees own 9 percent.

A solution for SNCM is a precondition for Veolia's plan to sell part of its Transdev stake to CDC, as CDC does not want to take over Transdev with SNCM. Lack of progress on SNCM has blocked a Veolia-CDC Transdev transaction for more than a year.

At the end of 2012, Veolia agreed with CDC to cut its Transdev stake to 40 percent while CDC would become the leading shareholder with 60 percent. Veolia wants to get out of the transport sector and reduce its SNCM stake further to 20 percent as it focuses on its core water, waste and energy businesses.

This deal was conditional on Veolia taking SNCM over from Transdev, but it has now lapsed. Veolia and CDC are still looking for a new owner for SNCM, whose militant unions have repeatedly organised strikes in the past years and finished another seven-day strike on Tuesday.

Veolia has already deconsolidated Transdev, which in 2012 lost 380 million euros on turnover of 7.9 billion euros. The business, which employs 95,000 people and operates train, tram, bus and other public transport networks in 21 countries.

On April 14, SNCM's board will meet to review a financing plan for the purchase of four new ships. ($1 = 0.7249 Euros) (Reporting by Jean-François Rosnoblet in Marseille and Gwladys Fouche in Oslo; Writing by Geert De Clercq; Editing by David Holmes and William Hardy)

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