North East port sold to property firm for 50p

Nov 17 2009 by Peter McCusker, The Journal

THE boss of the North East’s biggest port has welcomed news that it is to have a new owner after its Australian parent company agreed to sell it to a Canadian property company for just 50p.

Shareholders of Middlesbrough-based PD Ports owner Babcock & Brown Infrastructure (BBI) have approved a £665m cash injection into the debt-laden Australian port, railway and pipeline asset manager before it is sold. Canadian-based Brookfield, will acquire 100% of BBI’s shareholding for a nominal sum, believed to be Australian $1 or about 50p.

It’s a far cry from early 2006 when BBI bought PD Ports for £337m, and reflects on the recession’s impact on the freight market and the “mania” in the market for buying ports at the time, said one industry expert.

PD Ports is carrying over £300m of debt and Brookfield has agreed to pay £100m to creditors on completion.

The news has been welcomed by PD Ports managing director David Robinson. “This is a positive step forward and we hope its concluded within the next few weeks,” he said.

Toronto-based Brookfield is one of the world’s leading property companies controlling assets of over £70bn. In the North East it has swathes of property in the Pilgrim Street area of Newcastle, earmarked for development.

PD owns the massive port in Middlesbrough, the country’s second biggest by volume, as well as Hartlepool and a major presence on the Humber and the Isle of Wight.

Asda and Tesco are creating massive developments on the 700-acre Teesport site which also has planning permission for the construction of the Northern Gateway Container Terminal (NGCT) which will provide deep water access for larger container ships.

Mr Van Marle added: “A shrewd investor could make a lot of money out of the NGCT project if they get the timing right. Teesport is a very large site and, with the main southern ports Felixtowe and Southampton congested, there is ample room for further developments in the northern ports.”

BBI are desperate for cash after recording multi-million pound losses and having to writedown assets in the falling property market.

A statement from PD Ports said: “PD Ports, has confirmed the shareholders of Australian based Babcock & Brown Infrastructure (BBI) have voted to agree a proposed recapitalisation deal, led by the Canadian based Brookfield.

“BBI has agreed a proposed fundamental financial restructuring of its business, under the terms of which a cornerstone investor, Brookfield, will participate in a recapitalisation of BBI. The overall transaction is expected to complete 20 November 2009.

“As a consequence of the overall BBI deal, Brookfield will acquire 100% of BBI's shareholding in PD Ports, giving it effective ownership of PD Ports assets. This transaction will also complete on 20 November 2009.

“PD Ports' management and staff remain fully committed to delivering value to its customers and stakeholders and to progressing with its business strategy.”

Brookfield will have a 35 to 40% stake in BBI after it has made its investment.