(20 May 2013, Hong Kong) COSCO Pacific Limited (“COSCO Pacific” or the “Company”) (HKEx: 1199) announces that the Company has entered into a conditional agreement with a wholly owned subsidiary of its ultimate holding company COSCO Group. Pursuant to it, COSCO Pacific will dispose of its entire 21.8% indirect interest in China International Marine Containers (Group) Co., Ltd. (“CIMC”) (HKEx: 2039; SSE: 000039) for a cash consideration of approximately US$1.2 billion (equivalent to approximately HK$9.5 billion). This transaction will enable the Group to focus resources on the development of its core terminal and container leasing operations, thereby reinforcing its leadership as a top global terminal operator.
The net proceeds from the disposal will be used by the Company and its subsidiaries (together the “Group”) to expand and invest in its terminal and container leasing businesses, and further improvement in working capital and net debt position.
COSCO Pacific is one of top five terminal operators in the world. It mainly engages in the management and operation of terminals and container leasing businesses. Through the implementation of core strategies, including the acquisition of controlling stake in new terminals, expansion of global terminal networks and diversification of terminal investments, the Group aims to enhance its position as a leading global terminal operator. Meanwhile, it strives to enhance its leading position in the container leasing industry through continuous investment in the business, and will continue to expand its container leasing fleet, optimise the lease mix and provide comprehensive container leasing services to its customers.
The board of directors believes that COSCO Pacific’s shareholding in CIMC does not synchronize with its well-established long-term strategy. This investment was originally planned to increase the Group’s exposure in container manufacturing and sales businesses. Nevertheless, as CIMC has implemented a business diversification development strategy in recent years, its non-container business segments (such as energy, chemical and food equipment business) have developed rapidly. Besides, COSCO Pacific just holds a 21.8% stake in CIMC and is not its single largest shareholder. Therefore, it cannot actively take part in CIMC’s management.
By disposing of its interest in CIMC, the Group can realign resources to expand its core operations, i.e., terminals management and investment as well as container leasing operations. It will thus be able to create greater investment value to shareholders in medium to long term.
Besides, the disposal will generate substantial cash flow to the Group. Not only will its financial position be further strengthened, the Group will obtain additional resources to acquire quality terminal assets and improve profitability of all terminals. Its core terminal business will thus grow stronger and bigger, laying a solid foundation for the Group’s sustainable business growth. Moreover, Florens Container Holdings Limited (“Florens”), a subsidiary of COSCO Pacific specializing in container leasing business, has achieved outstanding performance in recent years. Given the strong financing capability and cashflow generation of container leasing business, the proceeds from the disposal can be used to further enhance Florens’ operations.
In line with its long-term strategy to focus on the development of terminal business, the Group has constantly been exploring and evaluating different investment and/or acquisition opportunities in terminals in China, South East Asia, North America and Europe. It has been in preliminary discussions with various third parties on pursuing potential projects that are expected to derive reasonable return and long term value on the investments. Up to date, the Group is still in active discussions with them and no legally-binding definitive documentation has been entered into yet. As such discussions are still on-going, there is no assurance that any investment or acquisition may ultimately materialize as a result thereof.
COSCO Pacific’s selection criterion for its future investment in terminal projects include: (1) the strategic location of the terminals; (2) the proven handling capacity of the terminals and expected growth potential; (3) operational efficiency of the terminals; and (4) the expected return and long-term value of the investment in the terminals.
The Company will hold an Extraordinary General Meeting on 13 June 2013 (Thursday) for deliberation and approval of this transaction.
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