CMPort intends to dispose of shares of Chiwan Wharf
On 5th February 2018, the indirect wholly-owned subsidiaries of China Merchants Port Holdings Company Limited and China Merchants Group entered into two share purchase agreements.
CMPort has agreed to sell approximately 25% of the total issued share capital in A shares and 8.58% of the total issued share capital in B shares of Shenzhen Chiwan Wharf Holdings Limited with the consideration of approximately HK$5.01billion and HK$738.44million respectively. At the same date, China Nanshan Development (Group) Incorporation, in which CMPort indirectly hold approximately 37%, entered into a share purchase agreement with CMG, China Nanshan has agreed to sell approximately 32.52% of the total issued share capital in A shares of Chiwan Wharf to CMG with the consideration of approximately HK$ 6.51billion.
Upon completion, CMPort will no longer have any interests in Chiwan Wharf, and the related entrustment agreements will terminate accordingly. Chiwan Wharf will cease to be recognised as a subsidiary in the consolidated financial statements of the Company. CMPort is expected to record a net gain from the disposal of Chiwan Wharf of approximately HK$3,882 million for the year ending 31st December 2018.
The disposal of Chiwan Wharf is an important first step for CMPort to honour the non-compete undertaking issued on 17th September 2012 and will also provide a platform for CMG to conduct further restructuring in the future to completely resolve the competition issue for Chiwan Wharf.
In addition, the Company is also of the view that it is currently a good timing to unlock the value of its investment in Chiwan Wharf as Chiwan Wharf’s contribution in terms of total container throughput has decreased from 2010 to 2016 and its net profit contribution to CMPort has stayed flat in the same period of time, despite an increase in Chiwan’s stake by the Company from 29.3% to 45.7%. The Company realising its investment in Chiwan Wharf at this time will generate a variety of new opportunities for the Company to create value for its shareholders by investing in other high-quality overseas projects to increase future investment returns.
Managing Director of CMPort Mr Bai Jingtao said, "CMPort always optimise its asset structure by implementing the Company's development strategy, with the goal to enhance the synergy of projects in order to reduce cost and increase efficiency. After the transaction, CMPort will still maintain its stakes in five port assets in Western Shenzhen area and continues to be a major investor in Western Shenzhen terminals.