CaiLan Container Terminal (CICT) , which has been operating at an estimated loss of $1 million per month since the past few months, is looking for external investment in return for an equity stake in the port
The port, which is a JV between CaiLan Port Investment JSC (CPI) and SSA-Holdings International Vietnam (SSAHVN) with a 51: 49 share ownership, respectively started operations in 2012.
SSAHVN has submitted recommendations to the government that CPI’s ownership in CICT be reduced in order to attract both domestic and foreign investors for the loss making port.
This moves comes at the back of Vinalines’ divestment plan that includes reducing shareholding in its subsidiary port CICT.
The decision is expected to be an effective measure to prevent banks from recovering the loan or closing the port.
CICT (whose domestic shareholders include, Vinalines, QuangNinh Port, Geleximo and individual investors) had a total investment of $155.3 million, worth 51 per cent equity stake, in the port; the remaining 49 per cent is held by SSAHVN.
In Nov 2014, CICT reported a loss of VND 218 billion ($1 million) and according to the terminal’s officials, Tran Nam Trung – deputy director of CICT, loss has been steady at $1 million per month since its operation in 2012.
One of the reasons for this is that CICT is a deep water port, which mainly serves large vessels; but due to recent economic climate, major carriers such as Maersk and Cosco have started using smaller vessels and often choose HaiPhong Port as an alternative.
The second reason is that CICT has a high debt/equity ratio of 67.82, which makes the annual payable interest very high. According to Vietstock database, CICT had to pay: $4.4 million as interest in 2012, $9.5 million in 2013, $13.6 million in 2014, which in turns make it very difficult to register profit.
