PYI cleared to sell 50% stake in Yangkou Port

PYI Corp will use some of the proceeds from the US$229.6 million sale of its majority stake in Yangkou Port to invest in a container port in Suzhou, said Tom Lau Ko-yuen, the managing director of the port and infrastructure company.


Shareholders have approved the company's plan to sell a 50.1 per cent stake in the port, reported SCMP.com.


The government of Rudong county, where Yangkou Port is located, bought the stake. This leaves PYI with a remaining 9.9 per cent interest in the port. Originally, PYI owned 75 per cent of Yangkou, but sold a 15 per cent stake in December 2009 for $45.64 million.


The $229.6 million fetched for the stake is 332 per cent above what it paid for the 50.1 per cent stake, Lau said.


"In the previous three years, we booked a large amount of fair value gain from Yangkou Port," he said. "This sale will allow us to realise in cash all the previous fair value gains, plus an additional $24.76 million."


PYI would use 20 per cent of the sale proceeds to finance investments, which include the Suzhou river container port, Lau said.


A joint venture, in which PYI has a 40 per cent share, will own and operate the Suzhou port. The China-Singapore Suzhou Industrial Park owns the other 60 per cent.


The sale leaves PYI, which focuses on the Yangtze River, with more financial capacity to continue its strategy of investing in ports along the river, Lau said. "If an opportunity arises, we will invest more along the Yangtze River."


PYI has equity investments in other ports along the river: Yangkou Port, Nantong Port, Jiaxing International Feeder Port, Jiangyin Sunan Port, and a liquefied petroleum gas terminal in Wuhan, the capital of Hubei province.


PYI will also use 20 per cent from the sale proceeds to reduce debt.


So far, Yangkou Port has secured one oil company, PetroChina, to invest in facilities there, and the port was in discussion with more petroleum companies, Lau said.


"An enormous amount of capital expenditure will be required to support incoming petrochemical projects in Yangkou Port. We're at a crossroads where Yangkou Port requires huge capital expenditure beyond the financial capacity of PYI. So it is time for the company to take advantage of the sale," he said.
(Source:http://www.cargonewsasia.com)