HONG KONG China Merchants Port Holdings (CMPort) intends to acquire 50 per cent of the Port of Newcastle, New South Wales, the company announced.
Last month, Hong Kong-listed China Merchants entered into the acquisition agreement with China Merchants Union (BVI) Limited, a substantial shareholder of CMPort and an associate of CMG) and Gold Newcastle Property Holding Pty Limited, of which CMU and Gold Newcastle agrees to sell their interest of 50 per cent in the Port of Newcastle.
The deal includes shareholder loans of A$162.5 million (US$126.5 million) to CMPort or its wholly owned subsidiaries with a total consideration of A$607.5 million.
The remaining 50 per cent interest in the Port of Newcastle is held by TIF Investment Trust, an independent third party.
"The acquisition is the first step for CMPort to invest in Oceania which can complement current trading network covered under the company's port portfolio with further potential synergies," said the company press release.
"Given the unique position of the Port of Newcastle with precincts containing land resources, the acquisition will bring opportunities for the company to further achieve its 'Port and Park' development under 'Port-Park-City' (PPC) model," it said.
This aims to operate its core port businesses together with the park development and infrastructure support, thereby achieving a port-centred ecosystem with port operations as its core, said the company.
"CMPort believes that the acquisition, which represents a fair and reasonable price, will generate positive long-term financial return to the company.
The Port of Newcastle is the largest port on the east coast of Australia and the world's leading coal export port. The principal business of the companies comprising the Port of Newcastle includes passive property investment.
This will include port management, responsibility for vessel scheduling, property management and port development, trade development, dredging and survey, wharf and berth services, maintenance of major port assets, and pricing for associated services, the company said.
"Based on the unaudited financial report of Port of Newcastle as at December 31, 2016, the total assets and net assets value attributable to the security holders of Port of Newcastle amounted to A$2.44 billion and A$854.8 million respectively.
The port consists of four port zones, including 21 Berths (nine exclusive coal berths) with a total design capacity of 211 million tonnes. In year 2016, it handled bulk cargo volume of 167 million tonnes, of which 161 million tonnes are generated from coal export.
The Port of Newcastle is the only gateway port for Hunter Valley coalfields which produces high-quality thermal coal, it handles 40 per cent of Australia's coal exports.
CMPort said Newcastle is poised to capture the rising demand for thermal coal from its current major importers from Japan, South Korea and Taiwan.