Ports of Auckland gets lifeline from shareholder
September 17th, 2009
Auckland Regional Holdings has dug into its own pockets to the tune of $70m to bolster the balance sheet of Ports of Auckland. The immediate thought of rivals such as Port of Tauranga will be they’re competing against a port company which can afford to under-perform, knowing the Auckland region is providing a safety net. ARH has been issued 50m $1 shares, of which 40m have been called, and provided a $20m loan. The port company will use the funds to repay existing debt.
The recapitalisation follows a strategic review by the port, which is currently in talks with its banks to renegotiate its facilities. Its finances have also been bolstered by the $40m sale of Queens Wharf last month, with an accounting gain of $20m to be recorded in its 2010 accounts. Ports of Auckland’s annual profit tumbled 30% to $15.7m, excluding write-downs on investment property. MD Jen Madsen says the port must confront what is now “a crisis of over-capacity in the international shipping sector.” He predicts an improved 2010 result though with ongoing market volatility. Peter Casey, ARH’s chief operating officer says the recapitalisation “puts in place an appropriate capital structure for these challenging times.” He says ARH has over $1bn of assets and can fund the new capital to the port company from its own means.
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