Cosco quits Hong Kong river terminal

Cosco quits Hong Kong river terminal

A Hong Kong unit of China's largest shipping line has sold its 10 percent stake in River Trade Terminal Co. Ltd., which hasn't made a profit since it opened in 1999, to the two other primary shareholders, Hutchison Whampoa Ltd. and Sun Hung Kai Properties Ltd.

The terminal is operated by Hutchison, whose International Port Holdings Ltd. unit is the world's largest private developer and operator of container terminals. Its Hongkong International Terminal Ltd. is the dominant operator at Hong Kong's main Kwai Chung box complex.

Cosco Pacific Ltd. said the river terminal needed to handle 3 million TEUs a year to break even. It processed about 1.8 million TEUs in 2002, against a design capacity of 1.3 million.

The terminal was recently given approval by a judge to handle ocean-going ships. The government said that broke conditions limiting its role to river trade vessels, and officials are expected to appeal the ruling.

Industry analysts have expressed doubt that the terminal can become profitable without ocean-going calls, despite the heavy volume of smaller ships plying the Pearl River linking Hong Kong to Guangdong province.

Sources quoted by the Hong Kong Standard say Cosco Pacific received about $150 million Hong Kong dollars ($19 million), against its initial HK$200 investment. No details of the deal were publicly disclosed.

Under terms of the original agreement, Cosco Pacific could sell only to other shareholders. This means Hutchison and Sun Hung Kai each now hold 43 percent, up from 38 percent. Jardine Matheson, an Asian conglomerate that retains a 14 percent holding.

Cosco Pacific, majority owned by China Ocean Shipping (Group) Co., operates an integrated range of activities including container leasing, terminals and related industries. It is the world's fifth-largest container lessor and has terminals in Hong Kong and China.