Cordiant helps fund a $117 million port expansion plan in Brazil

Final

September 14 2011

Issued on behalf of Cordiant Capital by Mattison Public Relations

Cordiant helps fund a $117 million port expansion plan in Brazil

Doubles capacity of the only dedicated container facility in Bahia
• Shortage of port handling capacity in Brazil hampering export growth

Cordiant Capital Inc. (“Cordiant”), the leading emerging markets private debt fund manager, is to help finance a $117.2 million port expansion project in the state of Bahia in north-eastern Brazil.

Cordiant’s $20 million loan to Tecon Salvador S.A. will finance the refurbishing and doubling of the terminal’s container handling capacity to cater for Brazil’s booming exports to Europe, the USA and China. Products exported through Salvador’s port are mainly petrochemicals, rubber, tires, cellulose, fruits and automotive parts.

The volume of containers going through Brazil’s ports has been increasing rapidly with a compounded annual growth rate of more than 10% between 1999 and 2010. Total throughput reached approximately 7.3 million twenty-foot equivalent units (TEUs) in 2010.

Tecon Salvador is the only dedicated container facility in the Bahia region and is currently operating at maximum capacity. Expansion plans are due to be completed in March 2012 when the terminal will have a container handling capacity of about 500,000 TEUs. This will rank Salvador among Brazil’s Top 10 largest container terminals.

David Creighton, President and CEO of Cordiant Capital, comments: “Port capacity in Brazil is completely saturated due to the country’s booming exports. The shortage of port handling capacity is hampering the country’s economic growth and infrastructure investments are urgently needed to remedy this.”

“Capacity constraints at Salvador’s port meant that goods produced in Bahia, such as cotton, have had to be shipped from Santos’ port, which is 2,000 km south of the state. Salvador’s expansion will cut transport costs dramatically.”

The project will allow the terminal to accommodate more cost-effective Post-Panamax vessels. A 70% increase of the container storage area, an installation of nine new cranes and other state-of-the-art equipment should also result in substantial operating efficiencies and a major reduction in environmental impact.

Re-connecting Brazil to Asia with a new direct service

The expansion of Salvador’s port will facilitate a new service launched recently to connect East Coast South America (ECSA) with Asia via the Panama Canal.

Explains David Creighton: “There hasn’t been a direct service from Salvador to Asia since 2003 when the size of the ships on the service increased above Salvador’s handling capacity. The expansion programme will re-establish traffic to Asia again from May 2011 and this will have a significant economic benefit for Brazil.”

In addition to boosting Brazil’s exports, the project will generate hundreds of jobs in Salvador. 300 workers will be required during the construction phase and 185 permanent jobs will be created at Tecon Salvador after the project completion. The company currently employs 521 workers.

The International Finance Corporation (IFC) is the lead arranger of the loan with whom Cordiant has been co-investing regularly over the last ten years. Cordiant also manages the Infrastructure Crisis Facility Debt Pool on behalf of the IFC. The Pool was set up to help make up for the collapse in emerging market infrastructure lending caused by the global banking crisis.

Earlier this year, the Infrastructure Crisis Facility Debt Pool was part of the consortium that provided a $100 million financing package to fund the expansion of one of the most important ports in Vietnam. The proceeds were used build Cai Lan International Container Terminal’s new deep water container-handling facilities which were needed in order to keep up with the fast growing shipping volumes in North Vietnam.

ENDS

About Cordiant Capital

Founded in 1999, Cordiant pioneered the creation of emerging market corporate loan funds that invest in partnership with International Financial Institutions. Cordiant has managed over $2.2 billion in subscriptions from some of the world’s largest institutional investors in three emerging market loan funds; the ICF Debt Pool; and one private equity fund, the Canada Investment Fund for Africa. The firm has made investments in nearly 200 companies in more than 50 countries. It has exposure to all major sectors, including a large number of infrastructure investments. Cordiant is a signatory to the UN Principles for Responsible Investment.

Press contacts

David Creighton,
President and CEO
Cordiant Capital
Tel: + 1 514 286 1142
info@cordiantcap.com

Nick Mattison or Fay Israsena
Mattison Public Relations
Tel: +44 (0) 20 7645 3636