PDA Corp plans 3b yuan bond offering

PUBLISHED : Monday, 24 March, 2008, 12:00am
UPDATED : Monday, 24 March, 2008, 12:00am


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PDA Corp, the parent company of Hong Kong-listed Dalian Port (PDA), plans to raise funds through a bond sale to help fund its 17 billion yuan (HK$18.78 billion) capital expenditure over the next three years.

The state-owned company, which operates the mainland's second-largest oil port, was awaiting approval from the National Development and Reform Commission to sell 3 billion yuan in enterprise bonds, company president Sun Hong said.

Capital spending over the next three years will be used for the expansion of its six business segments - container terminals, oil, bulk cargo, agricultural products, ore and passengers.

Its container and oil businesses are operated by the listed unit and the rest by the parent company.

Mr Sun said the group planned to further strengthen Dalian port as the most important hub port in northeast China as well as a transshipment port by building more facilities, such as a frozen warehouse with a capacity of 300,000 tonnes, and additional crude oil storage tanks and container berths.

'Funding is not a big problem for PDA Corp,' Mr Sun said, noting that the group's gearing ratio was relatively low at 39 per cent and profit was growing.

Some of the projects would have co-investors, he added.

For example, building of crude oil terminals at Xingang in Dalian was carried out in partnership with PetroChina.

Singapore's IMC Group is an investor in the US$700 million Changxing Island project, while building of a railway container logistics centre will take place in co-operation with the Ministry of Railways.

The government of Dalian also provided financial support for some infrastructure investment, he added.

The operator of Port of Dalian in the northeastern province of Liaoning, PDA Corp is the mainland's third-largest port operator with total assets of 24.5 billion yuan as at the end of last year. Its pre-tax profit more than doubled to 900 million yuan last year.

Mr Sun said PDA Corp planned to inject all operations into its listed unit and was considering floating shares in the mainland market, although no concrete plan had been set.

He declined to disclose financial details of the unlisted businesses, but said their asset sizes and quality were 'not worse' than the operations of the listed unit.

Mr Sun said further business co-operation was possible, or even a merger of port operators in Liaoning, as part of a provincial government plan to reduce competition within the industry.

PDA Corp holds a 15.8 per cent stake in Jinzhou Port.

The three other ports in Liaoning are Yingkou, Dandong and Huludao.

Gao Baoyu, president of Yingkou Port Group, said a merger with other port operators in the province would be a good direction to work for, but it would be difficult to achieve because of different interests in various companies and local governments.

Liaoning has projected total throughput to exceed 500 million tonnes by 2010 from 350 million tonnes in 2006, with Dalian, as the province's largest port, accounting for half that volume.