China Merchants Port has completed the purchase of eight terminals across Asia, Africa and Europe from French shipping giant CMA CGM.
The Hong Kong-based conglomerate reached initial close of the proposed acquisition of stakes in a global portfolio of terminals through 49%-owned joint venture Terminal Link, according to a company statement yesterday.
This involves the acquisitions of:
50% of Odessa Terminal Holdco (Ukraine);
49% of CMA CGM-PSA Lion Terminal (Singapore);
100% of Kingston Freeport Terminal (Jamaica);
30% of Rotterdam World Gateway (the Netherlands);
24% of Qingdao Qianwan United Advance Container Terminal (China);
47.25% of First Logistics Development Company (Vietnam);
14.5% of Laem Chabang International Terminal (Thailand); and
100% of CMA CGM Terminals Iraq S.A.S, which holds the lease contract and all assets and liabilities of Umm Qasr terminal (Iraq).
“[The company] has been actively exploring and acting on acquisition opportunities overseas as a pertinent means to add new growth drivers,” the company said.
The Chinese firm also finished subscription of the corresponding amount of the mandatory convertible bonds and the advancement of the corresponding loans as part of the sale. The aggregate cash paid for the subscription of the bonds and the principal of the loans was approximately USD 815m.
Terminal Link now owns various levels of equity interests in a portfolio of 21 terminals serving various regions such as Asia, Europe, the Middle East and the Caribbean. The acquisition allows China Merchants to expand its global terminal portfolio to cover 25 countries and regions, from 18.
CMA CGM in December signed a deal with the Chinese port group to sell a portfolio of stakes in 10 port terminals to Terminal Link – their joint venture set up in 2013 and 51%-owned by CMA CGM and 49% by China Merchants – in a USD 968m all-cash deal.
The sale of the remaining two terminals covered by the agreement between CMA CGM and China Merchants is scheduled to be completed by the end of this current half for an all-cash consideration or more than USD 150m, pending regulatory approvals.
The USD 968m sale was part of CMA CGM’s plan to reduce its debt and increase liquidity. The French firm was looking to raise more than USD 2bn in additional cash by mid-2020, while extending its debt maturities and reducing its debt by more than USD 1.3bn.
CMA CGM is strengthening its “balance sheet amidst the high uncertainty created by the global COVID-19 health crisis,” the company said in a separate statement. While the crisis has had a limited impact in the first quarter of 2020, the French group expects a decline in volumes, particularly outbound to Europe and the United States.