Thursday, October 15, 2009

PD Ports May Go For A Song As Part Of Australian Babcock And Brown Infrastructure Deal

Middlesbrough Ports Group Might Change Hands as Part of Canadian Brookfield Asset Management Agreement
Shipping News Feature

CANADA – BERMUDA – AUSTRALIA – UK Brookfield Asset Management and Brookfield Infrastructure have announced the signing of an agreement with Babcock and Brown Infrastructure (BBI) to sponsor the acquisition of 50% of the direct asset value of BBI in the course of which it will take 100% control of PD Ports for a “nominal sum”. Brookfield will simultaneously assume the outstanding liabilities of PD, supposedly £315 million, of which they will repay £100 million to creditors immediately.

The balance of the investment will see 49.9% control in the Queensland Dalrymple Bay Coal Terminal pass to Brookfield for circa $265 million the balance of the $1.1 billion investment being used to gain control of a 35 - 40% interest in the restructured BBI.

The deal is being put before BBI shareholders and a resolution is expected within a month.

The Handy Shipping Guide has featured PD Ports in several articles this year illustrating their efforts to improve their Teesport Base after suffering the loss of much steel business during the current slump. These include details of the ambitious Northern Gateway project.

Latest news for Teesport is good. In May Corus put their staff on notice due to the drop in demand for export product. Demand in the traditional markets, including Mexico, Korea and Italy for Corus’ cast product dried up and their blast furnace was closed. Now with demand increasing and prices rising iron ore and coke is being imported through the port again and steel being exported. No exact figures were available as to respective tonnages but numbers are increasing.

BBI had been touting their assets unsuccessfully recently, but Brookfield appear to have been shrewd enough not to over commit themselves in poor market conditions and to see recapitalisation of asset rich BBI as a sound long term investment.

Pic: Artists Impression of Teesport Northern Gateway Project