Seller's need to wake up to today's lower prices
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Those seeking to sell terminals to raise much needed cash will be operating in a buyers' market.
Listed port companies may have seen stocks crash in line with asset valuations, but transactions remain few and far between.
Although there has been some activity in the US - most notably the concession awarded by the port of Oakland to a company owned jointly by Ports America (which is controlled by Highstar Capital) and Mediterranean Shipping Company (MSC), and an unsolicited proposal from CenterPoint Properties to the Port of Virginia - the market for port assets remains slow because of the ongoing tightness of credit.
"The capital markets remain closed to new deals other than for very solid and established borrowers," explains Paul Slater, chairman of First International Corp. "I have seen no activity in the [private to private] ports sector which is hardly surprising,"
Manju Chandrasekhar, vice president of port consultancy Halcrow, says that investments made in ports in recent years were based on the presumption of long-term cargo volume growth. Those presumptions are now in tatters, but although cash buyers are waiting on the sidelines they are looking for much lower prices than most sellers are willing to countenance.
"The fundamentals and forward projections for revenue are now very different and credit is still tight," he says. "There are companies that need to dispose of assets, but they're not willing to take less than 80 cents on the dollar, for example, which potential buyers may still view as being too expensive.
"They don't want to realise those losses. But buyers are looking for bargains so there is no common ground.
"There are opportunities for cash-rich buyers, but I think most activity will be for distressed assets so this means more private-private transactions and less public-private, at least in North America.
"People don't want risky investments. We're looking at less leveraged deals and more due diligence."
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