Friday, February 6, 2009

Hutchison says withdraws from Ecuador port project

Hutchison Whampoa's <0013.HK> port unit said it will withdraw from a Manta cargo port project, reportedly worth $513 million, after the Ecuadorian government made changes in the concession agreement.

This is the first major project to be abandoned by Hutchison after the port-to-telecoms conglomerate said last October it would halt on ''uncommitted spending'' until June 2009 and all investments would require a new look amid the global financial crisis.

[ID:nHKG51727] Hutchison Port Holdings Group said in a statement on Friday its member Terminales Internacionales de Ecuador S.A. will withdraw from the concession agreement to operate the Port of Manta in Ecuador because it found the changes unacceptable.

Ecuador President Rafael Correa said in January that he had ''pulled out a yellow card'' for Hutchison, the world's largest container terminal operator, due to delays in investment in the project, the South China Morning Post reported.

Correa said if Hutchison could not meet its commitments ''it will have to leave the country,'' the paper said.

Analysts said it was not surprised that Hutchison would take the opportunity of weak economic conditions to reorganise its business.

''Hutchison's business is closely related to the world economy and now under the global financial crisis, there is no doubt that its business will be affected,'' said Marco Mak, an analyst at Tai Fook Securities.

Shares in Hutchison fell nearly 2 percent earlier on Friday as its unit Husky Energy reported its fourth quarter profit sank 79 percent. The stock closed 0.7 percent up, lagging a 3.6 percent rise on the blue chip Hang Seng Index <.HSI>.

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