Cast Group

CP COMPLETES ACQUISITION OF CAST SHIPPING BUSINESS

Canadian Pacific Ltd. now owns the North Atlantic shipping business of the ailing Cast Group, thereby putting 80 percent of the container traffic at the Port of Montreal under a single owner. "We have finally cleared the regulatory and other hurdles to pull off a complex transaction," Ray Miles, chief executive of CP Ships, the maritime subsidiary of Canadian Pacific, announced Friday."The alternative would have been extremely grim for Cast's 500 employees," Mr. Miles told a press conference in Montreal shortly after the transaction was signed in Bermuda. He said "Cast is bankrupt and Canadian Pacific has saved the company from going under." Mr. Miles described the deal as "a major step towards our objective of creating a world-class Canadian-owned shipping operator to compete effectively with the global carriers on the North Atlantic." Together, Cast of Bermuda, and Canada Maritime, the operational arm of CP Ships, moved some 400,000 20-foot equivalent units (TEUs) in 1994 - with more than half the volume generated from the U.S. Midwest. The Canada Maritime portion amounts to 245,000 TEUs. Mr. Miles said the combined business of Cast and Canada Maritime represents a 15 percent share of the Europe-North America container market. He confirmed that Cast will continue to be run as a separate entity, though synergies will be carried out to reduce costs. A major corporate change accompanied the announcement, with Peter Keller, who had been with Cast for a decade, being immediately replaced as chief executive of Cast by Frank Halliwell. Prior to the appointment, Mr. Halliwell was chief operating officer and deputy chief executive of Canada Maritime. Mr. Miles said Canadian Pacific was injecting a working capital of about 50 million Canadian dollars (US$35 million) "so suppliers of Cast can get paid." As part of the transaction, he said the Royal Bank of Canada, the main secured creditor of Cast, agreed to forgive Cast's total debt. The figure was not specified, though Mr. Miles indicated "the Cast debt is significantly higher than the value of the business." While CP Ships achieved a profit of US$62 million last year, Mr. Miles said Cast recorded a loss of US$13 million for the 1994-95 fiscal year ended March 31. This followed previous annual losses of US$10 million for 1993-94 and US$50 million for 1992-93, he said, revealing data that had been confidential. Canadian Pacific reached an agreement in principle to acquire Cast on July 21. Last January, the National Transportation Agency said the transaction was ''not against the public interest" following a two-week public hearing. A subsequent appeal by the CN North America railroad was rejected by the Federal Court of Appeal. The last regulatory obstacle was overcome when the Bureau of Competition Policy decided not to block the deal.

Canada · 1 Apr 1995