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Monday, 22 February 2016

International bidders line up for Brazilian box terminal

The Up For Sale Tecon Sepetiba container terminal in Brazil’s state of Rio de Janeiro has received 10 non-binding  “proposals from companies interested in buying it”, according to the box facility’s owners Companhia Siderúrgica Nacional (CSN). The purchase price is believed to be in the Reais1.2 billion to Reais1.5 billion ($371 million) range, according to a former Sepetiba Tecon executive, and Advent International is considered favourite to win the bid, according to various sources in Rio de Janeiro.

Among the companies understood to be interested are PSA International (of Singapore), Brazilian operator Wilson, Sons (which already has box terminals in Salvador and in Rio Grande and makes no secret of the fact it wants a terminal in the southeast of Brazil), LOGZ (which has shares in both Porto Itapoa and Terminal Portuaria Santa Catarina, or TESC, in Santa Catarina) plus the Chilean stevedoring company SudAmericana Agencia Aereas e Maritmos (or SAAM).

According to reliable Port Finance International sources, CSN – Brazil’s leading steel company - is evaluating the 10 “non-binding offers” and will select the best three before the end of the first quarter of this year and will then ask those companies to make “firm offers”.

CSN is desperate to sell all of its “non-core assets” due to cheap Chinese steel imports depressing its domestic and international sales, but is still asking for up to Reais1.5 billion for Sepetiba Tecon which – with its deep draft of 14.5 metres (47.57 feet) alongside and a channel with 17.5 meters – has a lot of potential as an East Coast of South America (ECSA) hub port. Sepetiba Tecon covers an area of 400.000 square meters (4.3 million square feet) and also has a railroad link to the MRS Logistica network.

In July of last year Benjamin Steinbruch, the CEO for CSN, commissioned a specialized financial firm to draw up a plan for a sell-off and work out a market price evaluation of the box facility, which is located just 70 km from downtown Rio de Janeiro and has a hinterland that includes Belo Horizonte and Sao Paulo as well as Rio de Janeiro, a trio which, together, are responsible for 70 percent of Brazil's entire gdp.

And according to PFI sources close to Sepetiba Tecon, Advent International, which already has a controlling stake in the Terminal de Conteineres do Paranagua (TCP), in the state of

Parana, has also delivered a non-binding bid for Sepetiba Tecon.

Advent International is a private equity fund headquartered out of Boston, Massachusetts which has been involved in Brazil since 1997, and has an office in Sao Paulo. It bought a controlling share of TCP back in July 2011 and the box facility has, in that period, become the second biggest container terminal in Brazil, with around 890,000 TEU handled in 2015, with only Santos Brasil’s Tecon Santos facility handling more boxes.

Several sources in Rio de Janeiro and Sao Paulo consider Advent, possibly with another partner, as being the likely favourite to become the new owner of Sepetiba Tecon. Another

private equity fund, Brookfield Infrastructure Partners – which operates private toll roads covering 3,300 km in Chile and Brazil – is also understood to be one of the bidders.

It is also very likely that Hutchison Port Holdings is also one of the 10 bidders, as it too wants to add a Brazilian container terminal to the one it already operates in Buenos Aires.

Sepetiba Tecon handled just under 275,000 TEU in 2015 (up from the 210,000 TEU handled in 2014) and Its record cargo handling year was in 2011 when it handled 321,000 TEU.

CSN has been trying to find companies to buy shares in Sepetiba Tecon for around two years and then for the past six months or so upped the ante and started to look for a buyer for the whole terminal: but only if the price is right.

Article submitted Friday 19 February 2016.

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