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Port deal aims to raise funds

TIANJIN Port Development Holdings Ltd agreed to buy an HK$11-billion (US$1.4 billion) controlling stake in a Shanghai-listed affiliate as the Tianjin city government reshuffles its harbor assets to help raise funds overseas.

Tianjin Port Development will issue HK$7 billion of new shares to a city-controlled company and pay HK$3.9 billion in cash for 57 percent of Tianjin Port Holdings Co, it said in a Hong Kong stock exchange statement yesterday.

Tianjin, home to northern China's busiest harbor, has sought to reorganize port holdings for at least 18 months to help finance new facilities as the central government tries to boost economic growth in the region. The port-holding company intends to spend 12.8 billion yuan (US$1.87 billion) this year on projects including oil and coal terminals.

"It's clear that Tianjin Port Development will become the platform to receive the group's assets," said Ji Min, an analyst at China Merchants Securities Co in Shenzhen. "This is the best way to realize the port operator's group listing plan."

Tianjin Port Development has a market value of US$518.7 million, according to Bloomberg News data. The company plans to issue about 3.4 billion shares to Tianjin Port (Group) Co at HK$2.0916 apiece, it said. That's a 7-percent discount to its HK$2.25 closing price on Friday. The stock was halted yesterday and will resume trading today.

Tianjin Port Group will hold at least 51 percent of Tianjin Port Development following the deal, which still needs approval from Tianjin Port Development shareholders and regulators.

"This transaction will effectively lead to the integration of port assets in the port of Tianjin," Yu said yesterday in Hong Kong. The Shanghai-listed unit will get priority for investments in the future, he added.

Tianjin Port Development may issue new shares, borrow funds or use internal resources to fund the cash portion of the deal, Vice Chairman Nie Jiansheng added.

Shanghai-listed Tianjin Port likely boosted 2008 profit by as much as 59 percent after buying terminals and shipping units, it said on January 19. The harbor's container traffic will probably rise 12 percent this year to 9.5 million boxes, with overall traffic likely jumping 7.3 percent, according to Tianjin Port Group.


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