International Container Terminal Services, Inc. (ICTSI) is negotiating with banks for the possible acquisition of Hanjin Heavy Industries and Construction Philippines’ (HHIC-Philippines) assets, a top official said.
“We’re still making presentations to the banks, the banks own it now…We’re developing a masterplan for Hanjin,” ICTSI Chairman and President Enrique K. Razon, Jr. told reporters after the company’s annual stockholders’ meeting in Solaire Resort and Casino on Thursday.
The discussions for the acquisition will include the payment of HHIC-Philippines’ loans and whether ICTSI will have a partner for the venture, among others.
Mr. Razon expressed his interest for the bankrupt shipbuilder’s assets back in February. HHIC-Philippines’ facilities are in the Subic Bay Freeport Zone. The local unit of the South Korean shipping company left some $412 million in outstanding loans from Philippine banks after it filed for corporate rehabilitation last Jan. 8. Overall, the company’s assets are estimated at about $1.6 billion.
“The banks will eventually give it to someone, they’re not going to run it themselves. The banks definitely want to get rid of it,” Mr. Razon said, although noting that they can opt to forego the deal “if it doesn’t work for us.”
The listed firm is looking to turn the property into a multipurpose facility, since Mr. Razon said they are not interested in the shipbuilding business.
“It’s a very large facility, so it will be several. The problem is the road is not really good. It’s okay for shipbuilding because they’re only there. But for other things, the road is the problem,” the tycoon said.
ICTSI Global Corporate Head Christian R. Gonzalez explained that there are concerns on the length and width of the road, as well as the safety of the community and commercial establishments near it.
“On top of that, why would someone drive an extra 50-60 kilometers when they could just go to Subic? You could eventually, but that will have to be something that the government considers in the long term,” Mr. Gonzalez said.
Meanwhile, Mr. Razon said they are “cautiously optimistic” for 2019, as he expects flat growth for global trade.
“So even if global trade doesn’t grow at all, which is more or less my expectation overall, you’ll have strong growth in places like Africa and other markets. But the main trade routes, Pacific, Atlantic, probably won’t grow. But we’ll get growth from having modern (facilities), almost all our facilities are modern na,” he explained.
ICTSI is spending $380 million in capital expenditures this year, half of which will be used for expansion of terminals in Manila. The rest will be used to fund its terminals in Mexico and Iraq, as well as for new equipment, upgrades, and carry-over maintenance.
Source: Business World
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