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China Merchants Group reorganizing 50% ownership in Australia's Newcastle port

China Merchants Group Ltd. is reorganizing its 50% stake in the Port of Newcastle in Australia, the world's biggest coal export port, with subsidiary China Merchants Port Holdings Co. Ltd., or CMPort, entering into an agreement Feb. 6 to acquire the interest from China Merchants Union (BVI) Ltd.

China Merchants Union is an associate of China Merchants Group and a major CMPort shareholder. The remaining 50% interest in the port is held by TIF Investment Trust, an independent third party.

Consideration will total A$607.5 million, equivalent to approximately HK$3.81 billion, which includes shareholder loans of A$162.5 million.

CMPort said the acquisition represents its first move into the Oceania region and the port will complement the trading network covered under its port portfolio.

The deal is subject to approval from the Australian Foreign Investment Review Board, according to a Feb. 7 report from The Australian.

The port handles approximately 40% of Australia's export volume of coal and is the only gateway port for the Hunter Valley coalfields in New South Wales, which produce high-quality thermal coal.

CMPort noted that the Newcastle port has a total design capacity of 211 million tonnes and 161 million tonnes of the 167 million tonnes of bulk cargo volume handled in 2016 was generated from coal export.

Based on an unaudited financial report effective as of Dec. 31, 2016, the port's total assets and net assets value attributable to its security holders amounted to about A$2.44 billion and A$854.8 million, respectively.

CMPort expects the Port of Newcastle to benefit from increasing demand for thermal coal from its current major importers, namely Japan, South Korea and Taiwan.