ICTSI to invest $170M on Ecuadorian port

International Container Terminal Services Inc. (ICTSI) will invest $170 million over the next three years for its newly-acquired port operations in Ecuador.

In a disclosure to the Philippine Stock Exchange, ICTSI said its subsidiary Contecon Guayaquil S. A. (CGSA) has signed a 20-year contract with the Autoridad Portuario de Guayaquil (APG) to manage and  operate the container and multi-purpose terminals at the Port of Guayaquil.

“ICTSI is set to invest $80 million for equipment and infrastructure in the first year of the concession, which will total $170 million over the first three years. In addition, ICTSI will pay APG $10.4 per 20 foot equivalent units (TEU) and $0.50 per bulk ton handled at the terminals,” the company said.

ICTSI would pay APG a premium of $30 million, payable over the next four years at $6 million per year, payable by the fifth day of the first month. The first $6 million was paid when the concession was signed last May 31.

It would also pay a fixed fee of $8.4 million per year (payable over trimester) during the 20-year term.

ICTSI’s subsidiary is expected to take over the terminals and start operations as early as July 1,  2007.

Guayaquil is the commercial center of Ecuador and offers a wealth of business opportunities. The port handles 93 percent of container traffic in/out the country and 62 percent of total import-export cargo, representing 453,000 TEUs and 5.1 million tons respectively, positioning it as the 13th largest portin Latin America and the Caribbean.

Located on the west coast of South America, close to the most important north-south shipping routes, the Port of Guayaquil is critical for the logistics of main ocean carriers in the US, Europe, and Far East trade lanes.

ICTSI operates container terminals in Poland, Brazil, Madagascar, Indonesia and Japan. Last year, it won a 10-year concession to operate theTartous Container Terminal in Syria.

Last January, ICTSI signed an agreement to buy 60 percent of Yantai Gangtong Container Terminal Co. Ltd., which manages the Yantai Gangtong port in the eastern Chinese province of Shandong.

International operations remains a significant contributor to ICTSI’s earnings, accounting for 60 percent of the company’s total net profit last year compared with only 34 percent in 2005.

ICTSI’s flagship operation is the Manila International Container terminal — the main entrance and exit point for the country’s imports and exports.

Last year, ICTSI invested P1.8 billion to continue to expand the handling capacity and improve the operating efficiency of its operations in Manila, Poland, Brazil and Madagascar.

Funding for the port operator’s continued expansion will come from proceeds of a planned secondary offering and private placement of shares, estimated to raise about P6.85 billion. Proceeds from the offering could increase by an additional P1.02 billion should the underwriters exercise their over-allotment option of over 39 million shares.