Joint bidder offers BRL 450 million for part of Suape shipyard

A joint-bidder (a kind of consortium formed to develop a specific project) made up of companies Conepar (which controls Cone S/A and Convida Participações) and ICTSI Rio (from the same group that controls Tecon Suape) offered BRL 40 million to the Atlântico Sul Shipyard (EAS) for an area put up for auction.

The amount is 50% higher than the minimum established as a minimum grant. The shipyard is offering two pieces of land in its area as part of the strategy to raise funds by getting rid of assets and exit the court-mandated financial reorganization process, which it has been since last June when it resumed its activities in the Suape Port Complex. The offer refers to an area identified as UPI-B Cais Sul.

As per the rules of the auction – which at least three interested parties have judicially contested – the company APM Terminals B.V. (APMT) of the Maersk group has 72 hours to make an offer after becoming aware of the bid presented by the joint bidder Conepar Tecon Suape.

However, such a counter-offer will have to be greater than the R$ 450 million offered for UPI-B Cais Sul. The second plot of land owned by EAS is much larger and received no bids.

The company APM Terminais B.V. (APMT) is allowed to make a higher offer since Judge Ildete Veríssimo de Lima, from the 1st Civil Court of the District of Ipojuca, permitted the company to participate in the process as a stalking horse, which gives it preference and grants the possibility of covering the value offered by competing firms.

APM Terminals offered the minimum grant amount of BRL 300 million.

At the opening of the proposals, the trustee (Medeiros & Medeiros) was questioned by APM Terminals lawyers as to whether two participants could become joint bidders.

The trustee then asked Judge Ildete Veríssimo de Lima of the 1st Civil Court of the District of Ipojuca to analyze this demand before APM Terminals can exercise its stalking horse right to make a counter-proposal in 72 hours. The judicial administrator will send the request voiced by the representative of APM Terminals to the judge overseeing the process.

Dispute

With the joint bidders entering the dispute, Cone (which operates an 800,000 m² logistics hub on the banks of the BR-101 highway and on the PE-009 road, which gives access to the Port of Suape) and Tecon Suape (which has operated a container terminal for 20 years where the Philippine group ICTSI has invested BRL 800 million), the competition over the future of container terminals in the Suape area.

Maersk, through APM Terminais B.V. (APMT), intends to build a Private Use Terminal (TUP) in Suape to compete with Tecon Suape, which operates a terminal that handles 500,000 containers per year and has the highest prices in the Brazilian market due to contractual obligations established by the Government of Pernambuco, the owner of the Suape Port Complex.

On the other hand, if the join-bidders arise victorious from the dispute, they plan to develop what they call Tecone (Condominio de Terminais Maritimos) with an estimated R$ 1.4 billion in investments divided into four axes that serve the interests of the Port of Suape.

The Tecone project – already presented to the Port of Suape – includes a gas terminal for handling LNG and LPG with a capacity of 115m³, a liquid storage terminal with a total of 364 thousand m³, a general cargo handling facility with a capacity of 90 thousand tonnes, and a service hub accommodating offices to provide support of export-oriented companies.

The two firms declared that they have enough resources to pay the BRL 450 million grant and create Tecone as they are already active in the financial and services market with financially stable projects.

Government supports Maersk

Despite this offer, the joint-bidder is likely to face opposition from the Pernambuco government, which has publicly pledged to support the Maersk project in constructing a TUP, even though Tecon Suape is responsible for generating two-thirds of the state’s revenue collected from the Suape Port Complex, all in fees and leases.

The state government is willing to give up this revenue to establish a service that charges lower prices and fosters healthy competition standards.

With its new TUP, Maersk would only pay port handling fees, which amount to less than a third of what Tecon has to pay to Suape. The TUP, being owned by Maersk, can operate indefinitely in Suape.

According to the project presented by the Conepar ICTSI consortium, the development of the port and its new activities, in practice, only expands the existing service offerings that show signs of strangulation due to new investments.

The government of Pernambuco would get R$ 2 billion in tax income, while the municipalities of Cabo and Ipojuca would receive more than R$ 40 million in service taxes.

The conceptual design of Tecone differs from that of Marsek, which is limited, at least in the proposal presented, to building a new container terminal to compete on prices with Tecon Suape, of which it is the primary customer, accounting for almost 60% of the revenue earned by the terminal.

APM Terminais B.V. (APMT) proposes to use the region to establish a container terminal, utilizing two piers built by EAS as access to the sea and will require dredging services for a draft of up to 15 meters for the company’s superships to anchor in Suape.

The government of Pernambuco is willing to invest in dredging and help the company.

Benefits for EAS shareholders

The process of selling the EAS areas dates back to 2019 when the company filed for bankruptcy and entered a court-mandated restructuring process to raise funds and pay debts of R$ 1.2 billion to creditors. The Brazilian development bank (BNDES), which lent R$ 1.0 billion to the Carmago Correia and Queiroz Galvão groups, is the largest creditor.

EAS selected two areas to raise part of these resources. One of these has a pier and an estimated value of BRL 300 million. The other area, contiguous to the first but with no port access, is worth BRL 595 million.

In an auction held in November, none of the areas received buying offers. Now, only of them – the one with direct access to the sea – received proposals.

This result should be ratified by Judge Ildete Veríssimo de Lima next week after ATM manifests itself whether it is willing to cover the Conepar ICTSI joint bidder offer.

The dispute between the two rivals is particularly exciting for the Carmago Correia and Queiroz groups.

By selling a portion of the land and continuing to operate the shipyard, they will be able to repay a portion of the loan to BNDES and, as a result, lower the level of warranties they provided on the construction of the EAS to get financing.

They have decreased this liability by more than half of their debt through the sale of land alone, freeing themselves from the responsibility of their guarantees. The R$ 800 million proposed for the two lots is enough to pay off more than 80% of the total BNDES debt.

Source: Jornal do Comércio

To read the full original article, please go to:

 https://jc.ne10.uol.com.br/colunas/jc-negocios/2022/07/15048881-donos-do-cone-e-do-tecon-suape-oferecem-rs-450-milhoes-por-terreno-do-estaleiro-atlantico-sul.html

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