Babcock & Brown Infrastructure has confirmed that in talks to sell all or part of PD Ports, the owner of the UK port of Teesport.
The troubled Australia-headquartered infrastructure investor said that it was "engaged in ongoing discussions" for the sale of an equity stake in PD Ports after receiving unsolicited approaches. The company confirmed that it was also negotiating the sale of a further interest in the Euroports business, the 20-port asset division in which it recently sold off a 29.7% stake.
Announcing its interim results this week, BBI expressed confidence in its PD Ports and Euroports businesses.
BBI’s MD, Jeff Kendrew said: "The PD Ports and Euroports businesses have some volume-related exposure linked to current economic conditions. We anticipate this exposure will be tempered as these businesses handle an extremely wide variety of cargo, primarily focused on bulk products such as grain, fertiliser, bulk oil, minerals, sugar, and thermal coal used in power generation."
PD Ports’ Northern Gateway container terminal project is one of the key developments that is likely to be attractive to investors in the business. The £330m (US$461m) facility will eventually boast capacity to handle 1.5m teu, though completion has now been delayed to 2011.
Two major supermarket chains, Asda and Tesco, have also been attracted to Teesport to establish major logistics warehousing facilities, which are expected to help drive more container traffic through the port. Construction of Tesco’s 1.2m sq ft import centre started in August 2008 and is on track to begin operating this summer.
In the six months to 31 December last year, PD Ports’ revenue fell from £67.1m to £64.3m, while Euroports revenue increased from £194.3m to £295.1m. On 27 January 2009, PD Ports extended its £75m debt facility, which will become due for renegotiations within six months.
The PD Ports business also has £300m of securitised debt put in place by former owner Nikko in 2001. "This means that BBI cannot, even if it wanted to, strip out cash or sell off PD Ports major assets in parts, as the securitised debtors/lendors have to agree all changes and have first access to funds raised," said PD Ports in a statement.
BBI Price at posting:
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