The port contracts casts uncertainty over billionaire Li Ka-shing owned CK Hutchison's planned $23 billion deal to sell its global ports business

New details emerged this week regarding a deal to take over management of the Balboa and Cristobal power stations when it was announced Hong Kong’s CK Hutchison Holdings Limited (CKHH) said  it has notified A.P. Moller-Maersk that any assumption by APM Terminals (APMT), an affiliate of A.P. Moller-Maersk, of operations of the two terminals without the agreement of CKHH will cause damages to CKHH, HPH and PPC, and will “result in recourse against APMT.”

Annulled key port contracts held by Panama Ports Company S.A. (PPC)

The move comes after Panama's Supreme Court annulled key port contracts held by Panama Ports Company S.A. (PPC), a CK Hutchison subsidiary in late January, leaving the future ownership of some Panama Canal operations unclear and possibly upsetting CK's plans to sell some terminals. declaring the concession granted to Panama Ports Company to operate the ports at the Panama Canal “unconstitutional.”

Recourse against APMT and/or its affiliates involved

Meanwhile , CKHH noted that Hutchison Port Holdings Limited (HPH) notified A.P. Moller-Maersk on Feb. 10 that any steps by APMT or any of its affiliates to assume the administration or operation of PPC’s ports at Balboa or Cristobal in any capacity for any period of time without the agreement of CKHH will cause damages to CKHH, HPH, and Panama Ports Company S.A. (PPC), an indirect  subsidiary of CKHH, and result in legal recourse against APMT and/or its affiliates involved.

APM Terminals Panama,

It is noteworthy that APM Terminals Panama, a Maersk subsidiary, said in late January it was willing to operate the Balboa and Cristobal terminals temporarily to prevent any impact on regional and global trade.

Broadly deployed steps to take over the operations of PPC

Meanwhile Panama Ports Company, which runs the two port terminals under the concession contract since the 1990s, said that the Panamanian State declared and broadly deployed steps to take over the operations of PPC after the judicial press release. Following the recent decision by Panama’s Supreme Court of Justice regarding the Balboa (Pacific) and Cristobal (Atlantic) terminals, the Panamanian State activated a technical operational transition plan aimed at ensuring the continuity of port activities at the ports of Cristóbal (Atlantic) and Balboa (Pacific).

Arbitration against Panama

At the same time PPC commenced arbitration against Panama on February 3 pursuant to the applicable concession contract and the rules of arbitration of the International Chamber of Commerce. PPC has held contracts since the 1990s to operate container terminals at the canal's Pacific and Atlantic entrances, separate from the waterway's operations.

CK Hutchison,will continue to consult with its legal counsel 

CK Hutchison, a port investor, developer and operator, said it will continue to consult with its legal counsel regarding all available recourse including additional national and international legal proceedings against Panama in this matter.

However, CKHH said it remained committed to ensuring that PPC will take all steps reasonably available to protect the employees who participate in its operations, to avoid disruptions to port operations, as well as customers and suppliers, and to facilitate the flow of vessels and cargo transiting the Panama Canal, provided that the actions of the Panama Supreme Court and the Panamanian State permit.

 A vital to global trade and U.S. commerce

The canal, one of the world's busiest waterways, is vital to global trade and U.S. commerce, with about two-thirds of transiting cargo bound for or originating in North America.

The Hong Kong conglomerate added that if the Panama Supreme Court's ruling, which has yet to come into force, is published and leads to PPC's concession being terminated, PPC would be unable to keep operating its terminals at the two ports.

Casts uncertainty over deal the Panama terminals,

On the other hand the status of the port contracts also casts uncertainty over billionaire Li Ka-shing owned CK Hutchison's planned $23 billion deal to sell its global ports business, including the Panama terminals, to a consortium led by U.S. asset manager BlackRock (BLK.N), opens new tab.

Related : CK Hutchison's move to MSC and Blackrock risks falling through

Source : Agencies 

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