The Port of Darwin has been sold on a 99-year lease for just over half a billion dollars, according to Northern Territory chief minister Adam Giles.
Giles announced on Tuesday the port, which handles a healthy mixture of containerised, bulk and general cargo, would be sold on a 99-year lease to privately-owned Chinese outfit Landbridge Group, after a competitive process “which included local and international interest and resulted in a number of high quality binding offers,” the government said.
According to the AFR’s Street Talk column earlier in the week, Port of Brisbane and a grouping of Colonial First State and Deutsche Asset & Wealth Management were Landbridge’s primary competitors in the bidding war, for a port which independent commentators suggested would go for roughly more than $300 million.
Landbridge Infrastructure Australia director Mike Hughes said the company plans to put Darwin on the map for Chinese businesses.
“We plan on making considerable financial investment in the Port of Darwin,” he said.
“In addition to committing an initial $35 million of new growth investment expenditure over the first five years, we anticipate in excess of $200 million of capital expenditure over the next 25 years.”
Landbridge operates a 30mtpa port in North Haizhou Bay, in China’s Shandong Province, strategically located between Beijing and Shanghai.
Hughes said Landbridge’s first goal at Darwin will be to promote volume growth.
Giles said the $506 million up-front sale – roughly 25 times expected EBITDA in 2016 – was an outstanding result for the Territory, but said the transaction was more about growing the port, and the economy with it.
“Although the upfront cash proceeds are compelling, reflecting the strong interest in the port from potential investors, my Government has always said that this transaction is about growing the port and the economy,” he said.
“The proceeds will be used to invest in new economic infrastructure for the benefit for all Territorians.”
Landbridge has confirmed its intent to maintain the established workforce at the Port of Darwin and that there will be no forced redundancies during the term of the current Enterprise Agreement, which terminates in June 2018.
“Through our significant investment in the Port of Darwin, Landbridge intends to grow two way trade between Australia and Asia,” Hughes said, “leveraging Landbridge’s existing port and logistics businesses and firmly putting Darwin on the map for Chinese business.”
The government said it expected Landbridge’s extensive network “to promote oil and gas, mineral exports, live cattle export, inbound tourism and other investments in the Territory to the Asian business community”.
“Landbrige intends to hold events in both Darwin and China to strengthen Darwin’s ties with China, inviting senior representatives from government and key corporates including Chinese airlines, infrastructure investors and potential trade partners,” the government release added.