COSCO SHIP PORT (ASX: 01199) has announced a significant capital injection for its Abu Dhabi container terminal operations. Following the close of trading on June 26, 2026, the company, along with COSCO (Hong Kong) - a wholly-owned subsidiary of its parent company - entered into a subscription agreement with the target company. The target is COSCO SHIP PORT (Abu Dhabi Container Terminal) Co., Ltd., which is currently a wholly-owned subsidiary.

The agreement stipulates that COSCO (Hong Kong) will conditionally subscribe for new shares in the target company for approximately $14.108 million. This investment will grant COSCO (Hong Kong) a 40% stake in the target company on a post-allotment basis. Upon completion of this transaction, COSCO SHIP PORT will retain a 60% ownership stake, with COSCO (Hong Kong) holding the remaining 40%. The target company will continue to be a subsidiary, with its day-to-day operations managed by the group.

Post-completion, the parties will execute a shareholder agreement to govern their respective rights and obligations concerning the ownership and management of the target group. Furthermore, to address the capital requirements of the target group, a shareholder loan agreement will also be established.

Under this loan agreement, both COSCO SHIP PORT and COSCO (Hong Kong), acting as lenders, will provide a shareholder loan totaling $133.9 million to the target company as the borrower. The loan participation will be proportional to their shareholdings. Consequently, COSCO (Hong Kong) will contribute $53.56 million, while COSCO SHIP PORT will provide $80.34 million. A portion of this loan from the company will be deemed to include an existing inter-company account balance of $35.99 million owed by the target company.

Strategic Rationale for the Partnership

The target company, operating through a project company, is engaged in providing container terminal services at the Abu Dhabi facility. This project company operates the sole terminal in the core area of Abu Dhabi's Khalifa Port, granting it significant strategic value. Currently, the service capacity of the terminal's facilities is nearing saturation.

By introducing COSCO (Hong Kong) as a joint venture partner, the target group will secure both equity and loan capital to fund the second-phase development and construction of the terminal facilities. This move is expected to enhance financial security and project management capabilities. The collaboration will allow both parties to leverage their combined resources and expertise to achieve long-term, sustainable development.

Enhancing the Belt and Road Network

The involvement of COSCO (Hong Kong) is anticipated to help the group further solidify its presence at key hubs along the Belt and Road initiative. It aims to deepen economic and trade cooperation with the Middle East while boosting the synergy and operational efficiency of the group's global port and logistics network.

Following the transaction's completion, COSCO SHIP PORT will maintain its controlling interest in the target group and continue to oversee the daily operation and management of the terminal. This ensures business continuity and management stability. The capital provided by COSCO (Hong Kong) will enable COSCO SHIP PORT to allocate corresponding funds to other key projects, thereby improving overall capital utilization efficiency, fostering mutually beneficial cooperation across the group's platforms, and providing robust support for the group's broader overseas strategic expansion.