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Ports put 5,000-job deep water terminal on hold

Mar 3 2009 by Peter McCusker, The Journal

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TALKS are under way over a sale of a stake in the region’s biggest port operator as it emerged that plans to build a new deep water terminal at its Teesside operation – creating 5,000 jobs – have been delayed for at least a year due to the recession.

Babcock & Brown Infrastructure (BBI), the Australian parent company of PD Ports, which operates the Middlesbrough and Hartlepool ports, has confirmed it is in “on-going discussions for the sale of an equity stake”.

Last year PD Ports secured approval to create a £300m deepwater berth – The Northern Gateway Container Terminal (NGCT) – and expected to start work later this year. But this has now been put back due to the recession with PD saying work will now start in 2011.

BBI bought PD Ports in 2006 for £337m, inheriting £300m of debt from one of its previous owners. Talks about the possible sale of a stake are said to be driven by the company’s desire to secure cash after a series of write-downs on other assets saw it record a loss of around £140m in the six months to the end of December last year.

A spokesman for PD Ports said last night: “BBI has confirmed that it is engaged in on-going discussions for the sale of an equity stake in PD Ports. BBI cannot break up PD Ports to sell off selected assets.

“PD Ports securitisation, put in place by Nikko in 2001, means that the business still has circa £300m of securitised debt. This means that BBI cannot, even if it wanted to, strip out cash or sell off PD Ports’ major assets in parts, as the securitised debtors/lendors have to agree all changes and have first access to funds raised.

“BBI has been an excellent parent of PD Ports for the past three years but its business model, with significant debt, has become less favoured by the banks in the light of the recent ‘credit crunch’ and global economic downturn.” BBI is in the process of offloading non-core assets including a New Zealand power distribution company and an Australian coal terminal.