China's Cosco Shipping Ports has entered a transaction agreement with Qingdao Port International (QPI) to increase its share in Qingdao Port through cash and equity interest transfer.
Cosco Shipping Ports subsidiary Shanghai China Shipping Terminal Development (SCSTD) will subscribe for approximately one billion non-circulating domestic shares in QPI as part of the proposed strategic investment plan, for an estimated sum of RMB5.8bn ($846.7m).
Approximately RMB3.2bn ($465m) of the total amount will be settled by the transfer of a 20% equity interest in Qingdao Qianwan Container Terminal (QQCT) to QPI; the remaining RMB2.6bn ($378m) is to be settled in cash.
The subscription shares will account for nearly 16.82% of the issued share capital of QPI, and will increase Cosco Shipping Ports’ share in QPI to roughly 18.41% in total.
Cosco Shipping Ports aims to use the deal to boost its position in the greater China region and meet its strategy for increased control over its terminal assets.
The deal is also expected to enable the company to manage and develop the entire port area, faciliating the sustainable growth of the site.
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In addition, Cosco Shipping Ports has signed a strategic cooperation agreement with QPI, in an effort to lay the groundwork for a joint project involving the development of the Port of Qingdao into an international shipping hub in North East Asia.
The deal will also enable both the parties to jointly invest in overseas terminal projects, including the Khalifa Port Container Terminal II project in Abu Dhabi, United Arab Emirates.
Furthermore, the agreement allows both companies to establish terminal project management entities, to cooperate in the businesses of management and operation of China and overseas terminal projects of Cosco Shipping Ports.