ATCO buys into port terminal operator based in Chile

Calgary-based natural gas, electrical and real estate giant ATCO Ltd. is getting into the transportation business after buying a stake in a South American port operator.

ATCO has purchased 40 per cent of shares in Neltume Ports, which is based in Santiago, Chile and operates 16 port facilities and three stevedoring businesses, primarily located in Chile and Uruguay.

The Canadian company spent $450 million in the deal and Nancy Southern, chair and CEO with ATCO, said the investment will allow Neltume to finance growth opportunities and has strengthened ATCO’s partnership with Neltume’s parent company, Ultramar Ltda., which is also based in Santiago.

“This is an investment that diversifies ATCO’s portfolio by industry and geography,” Southern said in a conference call Wednesday, adding the deal will give ATCO exposure not only to the global transportation industry, but also to agriculture, since many South American agricultural commodities are shipped through Neltume ports.

Southern called the purchase a “low-risk investment,” and said Neltume Ports has strong growth potential driven by GDP growth in the South American markets it serves.

Neltume Ports handles nearly 51 million tonnes of product annually, including copper, forestry products, consumer goods and agricultural products, and employs approximately 3,900 employees.

ATCO, whose existing businesses include electricity and natural gas infrastructure, modular construction projects, and logistical support services, said it paid for the investment with a combination of cash on hand and funds from committed credit facilities, with plans to refinance a portion of the costs through a capital markets transaction.

The company says the acquisition is expected to gradually increase ATCO’s earnings per share in the first full year of ownership, “as well as deliver sustainable profitability through the execution of Neltume’s growth plans.”

ATCO partnered with Ultramar in 2016 through ATCO-Sabinco, which provides modular solutions, container offices and workforce mining camps in Chile.

Richard von Appen, chairman of Ultramar, said the deal will benefit both companies and support long-term development in the region.

“This agreement reaffirms Neltume’s commitment to the port sector and represents a great opportunity for ATCO to meaningfully contribute to the company’s growth plans in a highly dynamic South American infrastructure market,” von Appen said.

ATCO shares closed up 30 cents at $37.70 on Wednesday.