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Tauranga and Timaru Ports Agree Strategic Alliance

PrimePort Timaru
13 August 2013

Tauranga and Timaru Ports Agree Strategic Alliance

A New Era for New Zealand Freight

New Zealand s leading international freight gateway, Port of Tauranga, has today announced a strategic alliance with PrimePort Timaru that will herald a new era for New Zealand freight.

For a total investment of $21.6 million, Port of Tauranga has agreed to: Acquire a 50% shareholding in PrimePort, excluding its investment properties; Lease PrimePort s container terminal for up to 35 years; Acquire the container terminal operating assets and set up a new Port of Tauranga wholly owned subsidiary, Timaru Container Terminal Limited, to operate the terminal The transaction is subject to the successful outcome of the Timaru District Council s public consultation process.

Port of Tauranga Chief Executive, Mark Cairns, said Port of Tauranga continues to invest in becoming New Zealand s hub port. We see opportunities to grow PrimePort Timaru as a marshalling point for South Island cargo.

The alliance with PrimePort will allow South Island exporters and importers to benefit from the large number of international services that call at Tauranga, share the significant freight savings that will come with the arrival in New Zealand of the next generation of large ships and benefit from Port of Tauranga s container terminal expertise and world class productivity.

Port of Tauranga has the financial strength, location and transport connections to be New Zealand s hub port. Not only can Tauranga Container Terminal accommodate large ships, with our significant land holdings we have the potential to continue to expand at a lower cost than all other New Zealand ports.

PrimePort Chairman, Roger Gower, said: The alliance with Port of Tauranga positions PrimePort well for the future for the movement of both bulk and container cargoes. We expect this alliance to hasten the consolidation of freight routes in New Zealand by facilitating a more extensive schedule of coastal shipping and rail. It will allow for the redevelopment of Timaru port and the transport infrastructure in the region and the development of flexible and cost-effective routes to and from international markets for South Island exporters and importers.

Over the last twenty years, Port of Tauranga has grown to become New Zealand s largest and most efficient container terminal. We believe it is best placed to assist PrimePort to achieve its potential in the South Island. We are delighted with the alliance.

Port of Tauranga Chief Executive, Mark Cairns, also said: Port of Tauranga and PrimePort share many customer relationships. PrimePort is located in the heart of one of the country s leading primary production regions, while 75% of the South Island s population is located within a 200 km radius of its gates.

PrimePort is ideally positioned to tranship more South Island cargo across Port of Tauranga s container terminal. It also has the capacity to grow. In 2008, PrimePort was handling 80,000 TEU a year. However this number has declined as shipping lines have rationalised port calls in New Zealand.

Port of Tauranga offers greater flexibility and choice to exporters and importers with more than fifteen international services calling at Tauranga Container Terminal.

We are looking forward to working with PrimePort to develop opportunities to ship coastally and realise the significant economic benefits that the next generation of ships offer the national economy.


Notes for editors:

Terms of the agreement:

Port of Tauranga pays $21.6 million for 50% shareholding in PrimePort Timaru and the container terminal assets.

Port of Tauranga leases the container terminal from PrimePort for an initial term of 15 years with rights of renewal taking the total term to 35 years. It is responsible for the container terminal wharf maintenance while Prime Port covers capital expenditure.

Port of Tauranga s purchase includes all plant associated with the container terminal including cranes, forklifts and mobile plant Port of Tauranga will, through a wholly owned subsidiary, the Timaru Container Terminal Limited, lease and operate the container terminal.

Port of Tauranga is funding the acquisition from within current bank facilities.

Completion is subject to a successful outcome from the required month-long Timaru District Council public consultation process. This will commence on 17 August 2013.

About Port of Tauranga:

Port of Tauranga is New Zealand s largest port and the country s international freight gateway. It operates wharves at Sulphur Point and Mount Maunganui in Tauranga, as well as MetroPort, a raillinked inland port in South Auckland. The Port of Tauranga Group includes: Tapper Transport Limited - New Zealand s largest wharf cartage company and operator of a container freight station adjacent to MetroPort Auckland, which includes Priority Logistics a Bay of Plenty based transport and freight handling operation.

Quality Marshalling Limited - New Zealand s second largest log marshalling and scaling company, with operations at Mount Maunganui, Northport, Murupara, Rotorua, Kaingaroa, Napier and Auckland.

Northport Limited - a joint venture with Northland Port Corporation, operating a deep water commercial port at Marsden Point.

MetroPack Limited - a container packing and unpacking facility based in Auckland.

MetroBox Auckland Limited - a container cleaning, repair and storage facility at MetroPort, operated in a joint venture with KiwiRail.

Cubic Transport Services Limited (37.5% ownership) - specialists in moving freight within New Zealand.

About PrimePort Timaru: For more than 125 years, PrimePort Timaru has linked South Canterbury to international markets.

More than 75% of the South Island's population lives within a 200 km radius of its gates, while its immediate freight catchment hosts the second largest dairy processing plant in the world; the largest wool scour in the Southern Hemisphere; five export meat processing plants; five export timber plants and five export fishing companies. PrimePort's exports are mainly primary products destined for international markets, while most imports are destined to service the agricultural community.

It is currently 71.43% owned by the Timaru District Holdings Limited, a wholly owned subsidiary of Timaru District Council, and 28.57% owned by Port Industry Holdings Limited, a group of nine local private interests.


1 What are the terms of the proposed deal?

Port of Tauranga pays $21.6 million for 50% shareholding in PrimePort Timaru and the container terminal assets.

Port of Tauranga leases the container terminal from PrimePort for an initial term of 15 years with rights of renewal, taking the total term to 35 years. It is responsible for wharf maintenance while PrimePort covers capital expenditure.

Port of Tauranga purchases all plant associated with the container terminal including the cranes and mobile plant.

PrimePort s investment properties are not part of the sale to Port of Tauranga Limited. These transfer from PrimePort to Timaru District Holdings Limited for use in future port-related developments.

Port of Tauranga is funding the acquisition from within current bank facilities.

The agreement is conditional on PrimePort Timaru s controlling shareholder the Timaru District Council (via Timaru District Holdings) holding a public consultation process over the reduction of its shareholding to 50% in the port.

2 Who are PrimePort Timaru s shareholders and have they agreed to the alliance?

PrimePort is controlled by Timaru District Council via its 100% shareholding in Timaru District Holdings Limited, which has a 71.43% shareholding in PrimePort. The remaining 28.57% is held by Port Industry Holdings Limited (private interests).

Timaru District Holdings Limited has approved the alliance and Timaru District Council has voted in favour of it and has committed to taking this decision through the public consultation.

Port Industry Holdings Limited has agreed to sell 100% of its shareholding to Port of Tauranga Limited.

3 When is the Council due to make its decision?

The public consultation process commences on 17 August 2013 and completes on 17 September 2013.

Submissions are being called for during this period.

A public meeting is planned for 24 September 2013 to consider any submissions.

The Timaru District Council will meet on 8 October 2013 to finalise their decision.

4 Are there any other conditions to the deal?

For Timaru District Holdings to sell to 50% requires shareholder (Timaru District Council) approval and public consultation is required as part of that process.

5 When does the deal go unconditional? The deal is due to go unconditional on 11 October 2013.

Port of Tauranga will commence operating the Timaru Container Terminal on 1 December 2013.


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