By Paul Burkhardt (Bloomberg) —
A.P. Moller – Maersk A/S said a successful rival bidder fell short of tender requirements as it seeks to overturn the award of a concession to run and expand sub-Saharan Africa’s biggest container port to Filipino billionaire Enrique Razon’s harbor firm.
Copenhagen-based Maersk argued in court papers that International Container Terminal Services Inc. didn’t meet a stipulated solvency measure when it last year won the tender held by South Africa’s state-owned Transnet SOC Ltd. It was given the right to buy almost half of the main container terminal in the southeastern city of Durban and operate it for 25 years.
The legal challenge in the Durban High Court threatens to delay or even derail the biggest attempt yet to bring in private expertise to revive Transnet’s ports, which rank among the least efficient in the world, according to a World Bank study. Transnet operates most of South Africa’s ports and its freight railways.
“ICTSI ought to have been disqualified for failing the solvency requirement,” Maersk said in the papers, calling the award unlawful and invalid. “One of the main requirements of the tender was that the bidder that Transnet ends up appointing as its partner in the project must have the necessary financial muscle and capacity to attract investment.”
Seeking Interdict
Maersk unit APM Terminals, among the unsuccessful bidders, is seeking to interdict the award on the grounds that ICTSI fell short of a solvency requirement of 0.4, according to a copy of the court filings. Based on 2021 financial statements, the total equity divided by total assets of ICTSI was 0.24, it said.
ICTSI was judged “the best operating partner for this strategically critical port” and met a key criteria of making the highest offer for the shares on sale, a spokesperson for the company said in an emailed response. “We are financially robust with $1 billion in cash on our balance sheet.”
Shipping giant Maersk is the world’s second-largest container line and Denmark’s biggest company by revenue. A Maersk spokesman didn’t immediately comment.
“Transnet believes that it followed due process in appointing the preferred partner for its Durban Container Terminal Pier 2, and will allow the legal process to take its course,” the company said. Transnet said on March 1 that it planned to finalize the contract award to ICTSI after concluding a due diligence process.
The Maersk unit was the runner-up in the process, according to correspondence with Transnet included in the documents. Transnet shortlisted the firm along with companies including COSCO Shipping Ports Ltd., DP World Ltd. and China Harbour Engineering Company Ltd. and Guangzhou Port Co. Ltd.
The Transnet-ICTSI partnership stipulates the creation of a special purpose vehicle and the execution of several project agreements including a share purchase agreement, shareholder agreement and obtaining various approvals, Maersk said.
“The project to be undertaken by the preferred bidder with Transnet is massive and complicated,” it said, questioning ICTSI’s ability to execute it.
© 2024 Bloomberg L.P.
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