Maersk enters dispute for portion of Suape shipyard for BRL 2.6bn

Maersk, through its subsidiary APM Terminals, is negotiating the purchase of a portion of the Atlântico Sul Shipyard (EAS) at the Port of Suape, Pernambuco. The company intends to invest up to R$2.6 billion in the construction of a new container terminal at the site. However, the corporation must still win the auction for the asset, which occurs as part of the shipyard’s court-mandated economic recovery process.

In addition to Maersk, two other groups are participating in the dispute: the Philippine ICTSI and Conepar. Both already work in Suape. The delivery of offers is scheduled for Wednesday, July 6th, and the auction will be on Thursday (7th).

The international shipping group, however, has taken the lead for having already submitted a binding offer of BRL 300 million for a plot of land (UPI-B Cais Sul). With this, APM Terminals will enter the auction as a stalking horse, meaning that it may exercise preemptive rights and cover the offer in case of superior bids.

Conepar and ICTSI tried to challenge the auction on the grounds that the shipyard did not carry out a competitive process to choose APM as a “stalking horse,” harming competition. The court, however, rejected the requests.

The “stalking horse” model has become common in court-supervised financial reorganization processes. The logic is that, on the one hand, the selling company enjoys the security that there will be a minimum proposal – which increases interest in the asset. But on the other hand, the “stalking horse” buyer guarantees the right to submit a counterproposal.

“Maersk made a solid proposal, which EAS took to the creditors of the court-mandated reorganization, which, in turn, accepted Maersk as a ‘stalking horse.’ The auction is open for all participants to compete. For the shipyard, the important thing is to get the best overall amount possible to pay the creditors,” claims Felipe Camara, a partner at Lefosse, which represents the shipyard.

Maersk has talked to the Suape-based shipyard since the beginning of the process in February 2020. However, the interest in growing its presence in Suape has existed since much earlier, according to Santi Simone Casciano, Commercial Development leader at APM Terminals in Latin America. Today, the group is present in Itajaí (SC), Itapoá (SC), Pecém (CE), and Santos, in partnership with TIL, from MSC.

“We see a lot of potential in Suape. In addition to the possibility of adding more long-haul services, there is room to convert more truck cargo to cabotage, which is very strong in the port, but still suffers from high prices. We want to bring more competition to this market,” says Leonardo Levy, Corporate Development Manager at APM Terminals in Latin America.

The company plans to start operations with an initial capacity of 400,000 TEUs. “This would be the starting point. From there, we expect the market to react to the lower prices and expand capacity, potentially making Suape a ‘hub’ in Brazil’s northeast,” says Levy.

The expectation is to invest up to BRL 2.6 billion in the enterprise.

Maersk executives said that their competitors have no reason for complaint. “The stalking horse mechanism has already been used in similar court-mandated company restructuring processes in Brazil. So, it isn’t something new. Also, the auction is still open for bids, and other groups are qualified for entering the dispute,” says Casciano.

The disposal of assets is an essential part of the Suape shipyard financial recovery, controlled by Queiroz Galvão e Mover (Camargo Corrêa). The group filed for bankruptcy in January 2020 and asked for court supervision to pay a debt of R$ 1.4 billion – the largest creditor is BNDES – Brazil’s state-controlled development bank.

In addition to the area desired by Maersk (UPI-B Cais Sul), the auction scheduled for next week is trying to find a buyer for a second piece of land, UPI-B Central, valued at R$595 million. A source close to the company believes that an offer for both areas is unlikely. In October 2021, the shipyard held an auction for the two lots for R$ 895 million, but there was no interest. Thus came the idea of splitting the block.

There is also a third area for sale (the UPI-A). The shipyard signed a memorandum of understanding with a Brazilian group to negotiate the sale of the lot, which can be done directly. Talks, however, are ongoing, according to a source.

Source: Valor Econômico

To read the full original article, please go to: https://valor.globo.com/empresas/noticia/2022/07/01/maersk-disputa-area-do-eas-para-terminal-de-r-26-bi.ghtml

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