APM Terminals and International Container Terminal Services didn’t submit binding bids
Chinese shipping and port giant China Cosco Holdings Co. on Tuesday made a binding offer for a majority stake in the long-delayed privatization of Greece’s main port of Piraeus, a move that is expected to earn cash-strapped Athens hundreds of millions of euros and turn the Mediterranean port into a logistics hub for Chinese exports to Europe.
The Hellenic Republic Asset Development Fund, which handles state asset sales, didn’t reveal the valueof the bid, but gave Cosco, the sole bidder, a week to make a better offer.
Two other shortlisted investors—APM Terminals, owned by Danish shipping conglomerate A.P. Moller-Maersk A/S, and Philippines-based port operator International Container Terminal Services Inc.—didn’t submit binding bids.
“After careful review, we concluded that [Piraeus] is not an attractive business for us,” said Tom Boyd, a spokesman for APM Terminals.
People familiar with the transaction said Cosco’s bid for a 67% stake in the port was around €700 million (nearly $758 million) including about €350 million in infrastructure investments over five years. The original offer to investors was a 67.7% stake.
The Wall Street Journal reported that Cosco was the favorite to win the concession given its strong ties with Greece’s government and the fact that it already operates two container terminals in Piraeus under a 35-year concession it acquired in 2009.
Piraeus, a few miles south of the Greek capital, is the de facto home of the country’s giant shipping industry and is one of the largest ports in the Mediterranean. Cosco already uses Pireaus as a transshipment hub for Asian exports to Europe arriving on container vessels from China, given its proximity to the Suez Canal.
Cosco executives and other Chinese officials have said they want to develop the port into a logistics center that will move goods, mostly via rail, to Eastern Europe.
“It’s good news because it strengthens the investment climate in Greece at a difficult time and could generate more investments in rail infrastructure and other ports,” said George Xiradakis, an Athens-based marine-business consultant and an adviser of China Development Bank.
News of Cosco’s bid came on the day that another foreign investor, Vancouver, British Columbia-based Eldorado Gold Corp., said it would suspend one of the four mining operations in northern Greece that it acquired starting in 2008. Eldorado accused the government of long licensing delays, a criticism Greece has rejected.
Greece’s Syriza leftist government, which first won power in January 2015 and was re-elected in September, initially opposed privatizations to which the previous conservative administration had agreed. It rolled back all potential deals, and no sale proceeds came in 2015 despite an agreement with the country’s creditors that €2.8 billion worth of state asset sales would be completed.
The government had pushed the port’s privatization back for a year, upsetting potential investors and the country’s international creditors. The creditors had made the selling of state assets a condition for a multibillion-euro bailout package to keep Greece from defaulting on its debt.
Stergios Pitsiorlas, head of the Hellenic Republic Asset Development Fund, told the Wall Street Journal in December that the privatizations target for 2016 is set at €3.5 billion but added that €2.5 billion is more realistic.
The second-biggest Greek port, in the northern city of Thessaloniki, will be privatized next year, according to the development fund’s schedule. Both APM Terminals and ICTS are in the running for that port, along with Germany’s Deutsche Invest Equity Partners GmbH and Japan’s Mitsui & Co.
Binding bids are expected in April. People familiar with the matter said APM Terminals is the front-runner to win that concession.
Source: Wall Street Journal
Source: Wall Street Journal