US security concerns force Cosco-owned Orient Overseas to sell Long Beach port in California
- Sale of Hong Kong-based firm that had run the terminal for three decades to Chinese state-owned Cosco in 2017 raised concerns among US security agencies
- Share price of OOIL rises as sale of second largest port in the US is expected to net a US$1.29 billion gain
A Hong Kong-based company has been forced to sell its American container port after the US government raised security concerns about its parent being a Chinese state-owned shipping giant.
Orient Overseas (International), which is majority-owned by Cosco Shipping Holdings, will sell off its entire interest in Long Beach Container Terminal in California for US$1.78 billion (HK$13.97 billion) in cash, according to a stock exchange filing on Tuesday morning.
The sale to a US infrastructure fund is the fulfilment of a national security agreement signed last year and is expected to net OOIL a profit of US$1.29 billion (HK$10.15 billion), the company said in the announcement.
OOIL, founded as a shipping and logistics business in 1969 by the family of former Hong Kong Chief Executive Tung Chee-hwa, has owned the Long Beach port for more than three decades.
But its sale to Cosco in July 2017 for HK$49.23 billion raised a red flag with US security agencies, which were unhappy with the idea of a state-owned firm taking indirect ownership of a major port. Cosco now owns 75 per cent of OOIL.
