China's Cosco makes improved $400 million bid for Greece's largest port

ATHENS (Reuters) - Greece received an improved bid for its largest port on Wednesday, with the 368.5 million euros ($402 million) offered by Cosco Group 1919.HK pushing the Chinese company closer to a deal that would step up the privatization program agreed with Greece's international lenders.

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Privatizations have been a key element in Greece’s bailouts since 2010 but have reaped only 3.5 billion euros because of political resistance and bureaucratic hurdles.

The leftist government of Alexis Tsipras halted the sale of a majority stake in Piraeus Port OLPr.AT and other state assets after winning elections in January last year. The process resumed under the terms of a third international bailout for Greece of up to 86 billion euros ($94 billion) in August.

The board of the country’s privatization agency (HRADF) met on Wednesday to evaluate Cosco’s offer for a 67 percent stake in Piraeus Port, declared Cosco as the highest bidder and invited it to submit the required documents to name the company as a preferred investor.

The sale, if successfully concluded, will be the second large privatization for Tsipras's government since it took power. Athens sealed a 1.2 billion euro leasing deal for 14 regional airports with Germany's Fraport FRAG.DE in December.


Cosco has been operating one of the port’s container terminals since 2009 and is investing 230 million euros to build a second terminal at the port.

HRADF announced last week that the company was the sole bidder for Piraeus Port Authority (OLP), the manager of the port, which is a gateway to Asia, eastern Europe and north Africa. It had asked Cosco to improve its initial bid, which two sources close to the process said was about 300 million euros.

Cosco is now offering 22 euros per share, HRADF said, which translates into a premium of 69.8 percent based on Wednesday’s closing price of 12.95 euros a share, according to Reuters calculations.

Under the deal, Cosco will acquire a 51 percent stake in the port and the remaining 16 percent once its concludes mandatory infrastructure investments over five years.

Total investments will be about 350 million euros over 10 years, while the state will collect additional revenue of 410 million euros under the 36-year concession deal between OLP and the government, the agency said.

Piraeus Port handled 16.8 million passengers and 3.6 million 20-foot equivalent units of containers in 2014.

Greece has ensured that the company will keep its headquarters and listing in Athens, HRADF said.

The port’s workers and some local governors have opposed the sale, fearing it will lead to job cuts and poor revenues for the state.

(1 US dollar = 0.9157 euro)

Editing by Larry King and David Goodman