P&O cuts Hong Kong stake: Modern Terminals holding reduced to 5% by pounds 117m deal

PENINSULAR and Oriental Steam Navigation, the shipping and property group, has sold a 10 per cent stake in a Hong Kong port operator for pounds 117m.

P&O is reducing its holding in Modern Terminals from 15 to 5 per cent. The sale price is pounds 44m above the book value of the stake and the profit will be taken as an exceptional item.

The company refused to say who had bought the stake, as the buyer had asked for confidentiality.

P&O acquired a 29 per cent stake in Modern in 1986 and has been gradually reducing its holding over the past two years. The original purchase price of the shares sold yesterday was pounds 1.9m. It said: 'The disposal is part of P&O's policy of reducing its interest in operations it does not manage.'

The company has debts of pounds 1.5bn, about 65 per cent of its net assets. Proceeds from the sale will ease the debt burden and free funds for the development of P&O's two port projects in mainland China, where it does have management influence.

It has a 25 per cent stake in the Shekou container terminal close to Hong Kong and 51 per cent of the Zhangjiagang container terminal near Shanghai.

Shares in P&O rose 7p yesterday to close at 646p. Since sterling left the exchange rate mechanism they have nearly doubled in value as the company has benefited from strong positive sentiment about firms exposed to construction and property.

Over the same period the shares have outperformed the stock market average by 30 per cent.

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