Adani Ports is selling a $150 million terminal in Myanmar for $30 million

Adani Ports and Special Economic Zone Ltd (APSEZ) announced on Thursday that it has “closed” the sale of its newly built container terminal in Myanmar for US$30 million, about US$120 million less than what it sold for the construction of the facility, which suddenly became the subject of controversy and a sticking point for the company’s environmental, social and governance (ESG) credentials.

APSEZ has not disclosed the name of the buyer.

The $30 million sale price differs significantly from its earlier announcement that the company has entered into a Stock Purchase Agreement (SPA) with an unnamed buyer to sell the terminal “on the basis of a completed project, resulting in full repayment of its.” investments and loans granted and costs for the completion of the project”.

India’s largest transport operator, led by Gautam Adani, was forced to evacuate its terminal in the Yangon region after being imposed following US sanctions on serving and former Burmese military officials responsible for the February 1, 2021 coup the government that ousted the democratically elected Burmese and the repression of the Burmese people.

Following global backlash from some of its investors, APSEZ announced on May 22, 2022 that it had entered into a binding share purchase agreement to sell its investment in Coastal International Terminals Pte Ltd, which has investments in the Myanmar project.

Coastal International Terminals was formerly known as Adani International Terminals Pte Ltd, a Singapore-based entity formed by APSEZ in July 2017 to operate port and related businesses in the ASEAN region.

“The SPA is signed on the basis of a completed project, which ensures full repayment of its investments, loans granted and costs of completing the project. The transaction will be completed upon receipt of the proceeds in accordance with the agreed conditions precedent. Management has concluded that net realizable value is higher than book value,” the company said in May last year.

In announcing its fiscal 23rd quarter results on Feb. 7, the company said in an update that “as the project has yet to be commissioned, both parties mutually agreed in the prior quarter to extend the long stop date by further.” to be extended for six months. .

The share purchase agreement had certain conditions precedent (CPs) including the completion of the project and the appropriate approvals for the smooth transaction by the purchaser.

“Given the continued delay in the permitting process and challenges in meeting certain CPs, APSEZ obtained an independent valuation (of the terminal) on an “as is” basis, resulting in buyers and sellers renegotiating the sale price to $30 million. ‘ APSEZ said in a veiled statement on the sale of the terminal for a value much lower than what it had invested to build the facility.

“The buyer will pay the said amount to the seller within three working days after the seller has fulfilled all the required obligations. After receiving the full transaction value, APSEZ will transfer the equity to the buyer and its exit will be completed,” the port operator said on Thursday.

APSEZ’s premature exit from the Myanmar terminal is a setback for the company’s strategy to tie a “necklace of subcontinental ports” through organic/inorganic initiatives stretching from India to Colombo and Myanmar with the aim of providing a South Asian logistics solution to provide.

In May 2019, Adani Group announced it would invest up to US$290 million to build and operate a new container terminal along the Yangon River under a 50-year deal.

The Myanmar project was managed by Adani Yangon International Terminal Co Ltd (Adani), a unit of Coastal International Terminals Pte Ltd.

Ahlone International Port Terminal 2 (AIPT 2) was developed on 54 acres of land leased from Myanmar Economic Corporation Ltd (MEC), a corporation created by the US after the February 1 military coup against the democratically elected civilian government of Myanmar was sanctioned.

MEC, one of Myanmar’s largest companies, is controlled by its military’s Directorate of Defense Procurement.

The MEC mobilizes revenue for the Myanmar military, known as the Tatmadaw.

ITD Cementation India Ltd carried out the EPC work for the project.

The first phase of the terminal was due to be operational by the end of 2020 with a capacity to handle 150,000 20-foot units (TEU), but has been delayed.

In the second phase, the capacity of the terminal was to be expanded to 800,000 TEU.

Yangon’s deal also included the establishment of a maritime university to improve the skills of local people and build infrastructure such as waterways and other transportation facilities to increase efficiency and spur economic development in the region.

The AIPT 2 will be part of the Yangon Port Cluster, which currently includes the Asia World Port Terminal and the Myanmar Industrial Port. Together with Myanmar International Terminals Thilawa south of Yangon, the Yangon cluster handles 90 percent of Myanmar’s exports and imports.

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