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Sinotrans buys Keppel’s logistics businesses for $28m

Sinoway Shipping, a subsidiary of Sinotrans Limited, has inked agreements to acquire the entire stakes in Keppel Logistics (Foshan) Co (KLF) and Keppel Logistics (Hong Kong) Limited (KLHK) from Keppel Telecommunications & Transportation (Keppel T&T) for a total of about SGD39m ($28m).

Singapore’s Keppel T&T said the divestments are in line with the company strategy to unlock value and recycle capital, allowing the company more flexibility to pursue other opportunities.

The proposed deal is expected to be completed in 2019.

KLF, based in Foshan in China’s Guangdong province, provides port business services, dock operations and warehousing services. It owns, among others, Lanshi port and a 60% interest in Keppel Logistics (Foshan Sanshui Port) Company Limited, which operates Sanshui port. Lanshi port, however, is pending closure by the local government due to redevelopment plans.

Keppel T&T will sell its 70% interest in KLF to Sinoway Shipping for a cash consideration of RMB176.4m ($25.2m), and Sinoway Shipping will provide RMB48.5m to KLF for it to repay its shareholders’ loan due to Keppel T&T.

Eventually, Sinoway Shipping will work towards liquidating KLF after a compensation deal is reached with the local government on the closure of Lanshi port.

On the other hand, KLHK provides freight forwarding and barging services between Hong Kong, Shenzhen and Foshan.

Keppel T&T’s wholly-owned Steamers (HK) Limited will sell its 70% interest in KLHK to Sinoway Shipping for a cash consideration of RMB25.8m.

Read more: China sets out plans to strengthen transportation sector