ICTSI made a bold move when it turned to a perpetual corporate hybrid bond, which is a relatively new capital markets product in Asia, to meet its fundraising objectives in 2011.

Corporate hybrids are essentially bonds that have equity accounting treatment, including features such as no maturity and optional dividend payments.  Through corporate hybrids, companies are able to raise non-dilutive equity, which can be replaced with equity at a later stage as required.  While highly beneficial to issuers, allowing companies to raise funds to improve their capital positions without diluting their holdings, ICTSI won recognition for incorporating investor friendly features that made its perpetual securities one of the few bonds to perform in the secondary market in 2011.

The Company’s US$200 million hybrid in April 2011 drew a strong response from international investors with an order book totaling over US$800 million.  It was also able to return to the market in January 2012 to increase the size by another US$150 million.

 Attracting recognition in the financial industry, ICTSI’s transaction won the Philippine Capital Markets Deal of the Year from IFR Asia in 2011 and Best Deal of the Year from The Asset.  These are two of the most widely recognized annual award processes in the region.  IFR Asia noted that “the popularity of ICTSI’s offering underlined the appeal of a product that a Philippine issuer had never used previously and a structure that was entirely new to Asia.”  The Asset added that the deal featured “structures that were not seen in other perpetual deals launched in the market.”  Meanwhile, Alpha Southeast Asia, an institutional investment magazine for institutional investors, asset and fund management companies, hailed the transaction as the Philippine Deal of the Year.

Rafael Consing, ICTSI Vice President and Treasurer, was in Hong Kong last February to receive the awards.  Mr. Consing said:  “Our perpetual hybrid transaction constitutes a key component of our capital management strategy.  The strong investor response to both our first and second transactions is indicative of the positive reaction to both our Company’s credit quality as well as the attractive structure we put before investors.  We are also delighted that we have received three independent acknowledgments for our transaction from two of Asia’s top banking and finance publications.”

The ICTSI transaction in April 2011 was the first international (US dollar) hybrid from a Philippine corporate and Asia’s first perpetual hybrid bond from an unrated issuer.  HSBC was the Sole Structuring Advisor and Joint Bookrunner along with Citi for both the initial US$200 million deal in April 2011 and the subsequent US$150 million increase in January 2012.

The original ICTSI transaction was priced at 8.375% on 28 April 2011.  Of the 90 accounts in the order book, 73% were Asian investors and the remainder was from Europe.  Private banks accounted for over half (54%) of the investors, with fund managers (34%) and banks (12%) making up the remainder.

Sean McNelis, HSBC Asia Pacific Head of Financing Solutions Group, Global Banking and Markets, said:  “The success of the ICTSI hybrid demonstrates the importance of achieving a balance between issuer and investor objectives in designing the structure of these perpetual instruments.  We are delighted to have been instrumental in advising ICTSI on this landmark deal.”

“There are great business and growth opportunities in East Africa and this is not new territory for APM Terminals” said Mr. Peder Sondergaard, CEO for the Africa-Middle East region, who noted that Logistics Container Centre Mombasa (LCCM), part of APM Terminals Inland Services, has been in operation since 1997. He and other senior leaders including CEO Kim Fejfer recently visited Kenya and met with Kenya’s Prime Minister Raila Amolo Odinga and Minister of Trade Amos Kimunya for high level talks, and hosted meetings with local business and industry leaders in Mombasa and the Capitol of Nairobi.

APM Terminals, one of the largest port operators in Africa, currently operates nine ports in eight West African countries, as well as operations in both Morocco’s Tanger-Med port, and Egypt’s Suez Canal Container Terminal and an extensive Inland Services network across the continent, but no port operations on the continent’s Indian Ocean coast.

Although the International Monetary Fund has projected a 5.5% economic growth rate for  sub-Saharan Africa this year, and a 5.3% increase for 2013, obstacles to trade, particularly concerning cargo movements between neighboring countries, will prevent the full benefit of such economic progress from being felt across the African population.

The World Bank Report “De-Fragmenting Africa; Deepening Regional Trade Integration in Goods and Services” released in February, has estimated that “in sub-Saharan Africa it takes, on average, 38 days to import and 32 days to export goods across borders, whereas the number of days required is significantly lower in other regions” and that “the cost of trading across borders is the highest in the sub-Saharan Africa region, over twice as high compared to East Asia and OECD countries”.

Investment in modern cargo transportation infrastructure and services can help to alleviate these impediments, and foster higher rates of trade and economic development. APM Terminals’ Inland Services operations in East Africa span 12 countries currently including Kenya, Uganda and Tanzania, as well as parts of the Democratic Republic of the Congo and Zambia.

Mombasa, the busiest port on the East African Coast, handled approximately 770,000 TEUs in 2011, up from 695,000 TEUs in 2010, and has enjoyed a compounded annual growth rate (CAGR) of 15% during the preceding half decade. About half of this traffic is destined for neighboring land-locked countries such as Uganda, South Sudan and Rwanda.

APM Terminals is in talks with the Tanzanian Ministry of Transport and the Tanzania Ports Authority (TPA) to operate at the Port of Dar es Salaam, which handled 475,000 TEUs in 2011.

“We believe it would only benefit the port and the country to introduce a leading global port operator at Dar es Salaam, which would introduce healthy competition to the benefit of all port users” said APM Terminals’ Africa-Middle East Regional Vice President for Business Development, Hans-Ole Madsen.

Opportunities also exist beyond the Port of Dar es Salaam; Emmanuel Mallya, the Chairman of the Tanzania Shipping Association Chairman and a board member of the TPA told the Daily News of Tanzania “We need investors who will look at larger port expansion projects not necessarily at Dar es Salaam Port but also look elsewhere”, citing potential new port development project locations at Bagamoyo, Mbegani and Mwambani in the port city of Tanga, in the Tanga region of northern Tanzania, which borders Kenya.

“We are very interested in participating in and contributing to the high-growth potential of the Ports of Mombasa and Dar es Salaam, and are eager for the opportunity to expand our Global Port and Terminal Network into East Africa” added Mr. Sondergaard.

The Grand Alliance, which includes Hapag-Lloyd, NYK and OOCL, has upgraded its Atlantic Express Service (ATX), a North Europe container service that calls North Charleston Terminal on a weekly basis. The service has deployed four larger, post-Panamax vessels with capacity of 5,400 20-foot equivalent units (TEUs) in place of Panamax ships.

Charleston is the last U.S. port outbound on the service, signaling the importance of Southeast exports to the trade.

“Charleston is a natural gateway to North Europe, given the businesses with European ties that have established in South Carolina,” said Jim Newsome, president and CEO of the South Carolina Ports Authority.  

Charleston leads the European market among South Atlantic ports, with approximately 36 percent of the port’s container volume associated with North Europe. Additionally, the port’s deep shipping channels – the deepest in the region today – allow more capability for post-Panamax calls.

“Large vessels are not only being deployed in the trade between Asia and the U.S. East Coast,” Newsome said. “This represents the second carrier grouping to deploy post-Panamax container vessels in the trade between the U.S. and North Europe. When cargo operations are finished later today, this vessel will sail with a draft too deep to be accommodated in any other South Atlantic port.”  

The 5,400-TEU OOCL California will sail for Rotterdam, followed by calls in Hamburg, Le Havre and Southampton. Zim, ACL and Hamburg Sud also participate in the ATX service.

In Brunswick, the Board approved renovations to the Colonel’s Island terminal that will accommodate growth in the heavy construction equipment and machinery trade. “This project will provide greater flexibility in moving oversized roll-on/roll-off cargo at Colonel’s Island,” said GPA Executive Director Curtis Foltz. “It will increase efficiency, and lower long-term maintenance costs by providing a more durable surface for moving and staging these heavy cargos.”

The project, estimated to cost $2.8 million, will provide structural upgrades for roads, bridges, staging areas and rail loading/offloading areas. The project is in support of the nation’s fifth busiest port for total import-export of Ro/Ro cargo, and the third busiest port for the export of U.S.-made vehicles and machinery.

For fiscal year 2012 through February, Colonel’s Island has handled 330,709 units, and 641,408 tons of autos and machinery, for a 10 percent increase year over year. During the same period last fiscal year, Colonel’s Island handled 301,345 units and 581,479 tons of Ro/Ro cargo. In all of FY2011, Brunswick handled 897,152 tons of autos and machinery.

In Savannah, the Board considered recent efforts to accommodate strong growth in the movement of refrigerated cargo.

The first half of a 20-unit expansion in refrigerated container racks is now in operation. The other 10 will go into use by April. Each new rack will accommodate 24 refrigerated containers, for a total of 480 containers of added capacity. With these new units, the GPA will have a total of 64 refrigerated container racks in service, accommodating 1,536 boxes. For every ten racks placed into service, the GPA saves about 540,000 gallons of diesel fuel annually, which otherwise would have been used to power diesel generators.

The Port of Savannah is adding the racks in order to stay ahead of rising demand for frozen poultry and produce exports. In February, the GPA handled 5,496 twenty-foot equivalent container units (TEUs) of refrigerated goods, a 14.4 percent increase over the same month last year, which saw 4,803 TEUs. For fiscal year 2012 to date, that number is 45,733, a 16.7 percent increase over the same period in FY2011, which marked 39,166 TEUs.

Most of the refrigerated container business is in poultry, an $18.4 billion per year business in Georgia, according to the University of Georgia.

“As the top container port for American poultry exports, this expansion will not only grow the Port of Savannah’s capacity, but produce additional opportunity to export U.S.-grown products to the world,” said GPA Board Chairman Alec Poitevint.

Nearly 40 percent of America’s poultry exports move through the Port of Savannah, with Hong Kong, Angola, Georgia and China ranking as the top receiving nations.