Greece's Piraeus Port said on Thursday it would receive more than a fifth of revenues from a new cargo handling company to be run by China's Cosco , worth an estimated 3 billion euros over 35 years.
OLP, which approved late on Wednesday the terms of a deal for Cosco to upgrade and run cargo port facilities for up to 35 years, said rental costs would push the guaranteed amount of the transaction to 3.4 billion euros.
"OLP will receive 21 percent of the new company's revenues for the first eight years and about 25 percent in the next years," the company said in a statement.
OLP, which expects to make a loss this year due to labour action by dock workers, has said the deal will return it to profit once Cosco enters Piraeus in 2009. Cosco is expected to pay OLP an initial 50 million euros in 2008.
"This 50 million euros [in] revenues will be seen in the bottom line of 2009 results," an OLP official, who declined to be named, told Reuters. "OLP will receive the amount after Greek parliament approves the deal, probably in December."
Among other terms, the contract sets a 2015 deadline for Cosco, the world's fifth largest port operator, to complete the construction of one pier. If Cosco fails to meet the deadline, it has agreed to refund 112 million euros to OLP.
The Greek court of audit, which oversees large financial contracts with the state, is expected to approve the terms of agreement later in October.
Greece's conservative government sought investors to modernise and run outdated facilities at the country's two largest ports in Piraeus and Thessaloniki, with the aim of growing cargo business, boosting competitiveness, and turning them into regional hubs.
OLP, with a current market value of 298.5 million euros, is 74 percent state-owned. Its shares have lost 60 percent since the start of the year underperforming a 54 percent drop in benchmark index .
OLP, which approved late on Wednesday the terms of a deal for Cosco to upgrade and run cargo port facilities for up to 35 years, said rental costs would push the guaranteed amount of the transaction to 3.4 billion euros.
"OLP will receive 21 percent of the new company's revenues for the first eight years and about 25 percent in the next years," the company said in a statement.
OLP, which expects to make a loss this year due to labour action by dock workers, has said the deal will return it to profit once Cosco enters Piraeus in 2009. Cosco is expected to pay OLP an initial 50 million euros in 2008.
"This 50 million euros [in] revenues will be seen in the bottom line of 2009 results," an OLP official, who declined to be named, told Reuters. "OLP will receive the amount after Greek parliament approves the deal, probably in December."
Among other terms, the contract sets a 2015 deadline for Cosco, the world's fifth largest port operator, to complete the construction of one pier. If Cosco fails to meet the deadline, it has agreed to refund 112 million euros to OLP.
The Greek court of audit, which oversees large financial contracts with the state, is expected to approve the terms of agreement later in October.
Greece's conservative government sought investors to modernise and run outdated facilities at the country's two largest ports in Piraeus and Thessaloniki, with the aim of growing cargo business, boosting competitiveness, and turning them into regional hubs.
OLP, with a current market value of 298.5 million euros, is 74 percent state-owned. Its shares have lost 60 percent since the start of the year underperforming a 54 percent drop in benchmark index .