COSCO Shipping has vowed to sell a key container port terminal in California to clear the final hurdle for its USD 6.3bn acquisition of Orient Overseas International (OOCL).
The Chinese transportation conglomerate, which runs Noatum Ports and Port of Piraeus, signed a National Security Agreement with US regulators committing to the disposal of the Long Beach Container Terminal (LBCT) to an unrelated third party, the company said on Sunday (8 July).
The state-owned giant has not yet confirmed the timeframe or pricing for the sale, a spokesperson told Inframation. Nor has it decided whether it will auction the assets, or negotiate one-on-one with prospective buyers.
“We are not in a big rush, and shall work out more details about how the transaction is expected to be carried out later in the year for interested international investors,” he said.
LBCT is one of the world’s most automated shipping facilities and among the busiest terminals in the San Pedro Bay Port complex, which houses the Port of Los Angeles and the Port of Long Beach in southern California. In 2012, Hong Kong-based OOCL agreed to lease the terminal at the Port of Long Beach for USD 4.6bn over a 40-year period, marking one of the biggest US port deals ever.
The terminal’s Pier E facility opened in April 2016 and is scheduled to reach construction completion in late 2019. LBCT owns berths 22 through 26, with 4,200 feet of wharf line and the deepest dredged dockside of any US Pacific Coast port.
COSCO, meanwhile, runs the Pacific Container Terminal at the Port of Long Beach under a lease expiring in 2022 as well as the West Basin Container Terminal at the Port of Los Angeles whose concession ends in 2038.
Prior to the sale, LBCT’s ownership will transfer to a US trust whose principal trustee must be a US citizen, not a shareholder of OOIL and independent of COSCO. OOIL will be the sole beneficiary of the trust.
Shanghai-based COSCO agreed the move in an attempt to satisfy the Committee on Foreign Investment in the US (CFIUS), which has been reviewing the USD 6.3bn takeover of OOIL, announced in July 2017.
On 6 July, COSCO received a letter from CFIUS confirming it would as a result allow the transaction.
OOIL shareholders are now expected to accept COSCO’s offer by 27 July this year. COSCO said last weekthat it had cleared the final pre-condition after receiving approval from China’s anti-monopoly watchdog.