Port of Seattle may block sale of bankrupt Hanjin’s waterfront operation

Image courtesy of Port of Seatlle

The port and the proposed new owners of the Terminal 46 operation center are at odds over whether an $11 million security deposit is required under a lease that stretches through 2025.

The Port of Seattle is objecting to the sale of the operations center at Terminal 46, where bankrupt South Korean shipping company Hanjin is trying to unload its business to one of the world’s largest cargo firms.
The Northwest Seaport Alliance, which operates the Seattle and Tacoma ports, says it hasn’t received financial background information or a security deposit from the proposed new owners of the terminal facility.

On Friday, it asked a judge to block the pending sale unless the buyers hand over the financial documents and pay a minimum one-year lease charge of $11.25 million.

Last month, Switzerland-based Mediterranean Shipping and its affiliate, Luxembourg-based Terminal Investment Limited, agreed to buy a majority stake in the Terminal 46 operation from Hanjin, which went bankrupt in August.

Hanjin, which has leased the central Seattle waterfront terminal since 1991, shipped cargo from its own vessels and oversaw the unloading of all containers at the facility.

Lawyers for the Port said in court documents that they’re not necessarily trying to derail the sale but want to do their due diligence to ensure the new terminal operating company is fit to take over Hanjin’s old lease, which stretches through 2025.

Terminal Investment said its interpretation of the lease is that it doesn’t need to provide a security deposit, court records show. Previously, Hanjin had provided only a corporate guaranty that it would fulfill the lease, but those assurances are now worthless because the company is bankrupt.

A hearing on the Port’s objection is Thursday in U.S. Bankruptcy Court in New Jersey, where Hanjin filed for Chapter 15 protection.

If the objection is denied, officials at the seaport alliance said they’d work with the new owners to try to come up with a different security deposit or background check. They don’t necessarily intend to end the lease altogether.

The dispute arose after Mediterranean and Terminal Investment agreed in December to pay $78 million to purchase Hanjin’s controlling stake in Total Terminals International, which controls terminal operations at the Long Beach, Calif., and Seattle ports. The would-be new owners also took on $203 million in outstanding debt and forgave a $55 million outstanding balance from Hanjin.

The Long Beach operation makes up the bulk of the deal: It is four times bigger than the 40-acre facility in Seattle, and port officials in Southern California already signed off on the sale.

Seattle officials said last month that they viewed the deal as generally positive — since a bankrupt shipping company would be replaced by a “well-respected ocean carrier” — but they didn’t know much about the new owner’s plans.

Hanjin ships had accounted for about one-third of the traffic at Terminal 46, just west of the stadiums. Mediterranean is already a major shipping company at the terminal and its affiliate, Terminal Investment, is the minority owner of the operations company there.

Terminal Investment and Mediterranean did not respond to requests for comment.

Source: Seattle Times (LF)

Source: Seattle Times