Filipino giant that won Transnet contract vows to use all legal channels to stop Maersk in its tracks.
International Container Terminal Services Inc (ICTSI), the Philippines-based company which was the winning bidder for operating Pier 2 at the Durban Container Terminal, is taking a court decision to temporarily halt the agreement on legal review.
In a strongly worded statement issued on Tuesday, ICTSI vows to use all legal channels to make sure that “Maersk is not successful in holding the Durban port and indeed [that] the South African economy [is not held] hostage to their interests”.
On 9 October, Judge Robin Mossop of the Durban High Court issued an interdict to stop the agreement from taking effect in response to a legal challenge from the losing bidder, APM Terminals.
APM Terminals, a unit of Danish shipping company Maersk’s Transport and Logistics division, claimed that ICTSI should have been disqualified from the tender process for not meeting the necessary solvency criteria.
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ICTSI, however, says its presence in 19 countries and six continents is evidence that it has the right systems in place.
“We remain confident that given the opportunity to execute on the partnership with Transnet, the Durban Port can again become a critical economic hub for South Africa and the region,” it notes.
ICTSI was announced as the winning bidder for Durban Container Terminal Pier 2 in July 2023. The public sector partnership (PSP) contract with Transnet allows ICTSI to acquire 49% of the port company for a total investment over 25 years of about R11 billion.
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Solvency ratio
Moneyweb reported earlier that one of APM Terminal’s main objections was Transnet’s insistence that all bidders satisfy a minimum solvency ratio of 0.4.
ICTSI only managed a solvency ratio of 0.24 when applying the same measure used by other bidders. Transnet allowed the winning bidder to calculate its solvency ratio using market capitalisation (rather than balance sheet valuations of total equity), which enabled it to meet the solvency requirements.
According to APM, Transnet should have disqualified ICTSI from the outset.
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A ‘well-run’ bidding process
ICTSI says the process through which it became the preferred bidder was “well-run, rigorous, and transparent”.
“APM is only motivated by its desire to entrench its dominant position and strong price leverage in the market, by preventing the entrant of an independent common user terminal operator at the Durban port,” the group notes.
ICTSI chair Enrique Razon Jr further argues that Maersk, in its legal challenge, has tried to use a “non-essential technicality that examined something called a solvency level”.
“In so doing it is trying to question a non-defined metric that many of the largest public corporates in the world would not meet, including, for instance, Apple Inc. It is also impossible for as many as 40% of the top 40 companies on the Johannesburg Stock Exchange to meet this misapplied metric.”
This article was republished from Moneyweb. Read the original here.
