COSCO Pacific provides a €54.8 million EUR loan for the Piraeus Container Terminal Franchise Project (Linked to Record ID#90730 and #90694)

Project narrative

On August 31, 2009, COSCO Pacific Limited signed a €54.8 million EUR loan agreement with Piraeus Container Terminal S.A. (PCT) — a special purpose vehicle (SPV) incorporated in Greece and wholly owned by COSCO Pacific Limited — for the Piraeus Container Terminal Franchise Project (captured via Record ID#92226). This loan carried an interest rate of 3-month Euribor plus a 1.5% margin; the repayment period would begin with the completion of the disbursement of the total amount of a China Development Bank (CDB) loan. This loan was subordinate to €215 million EUR in senior debt issued by CDB in August 2009 (and captured via Record ID#90730). PCT was established to manage Container Terminals No. 2 and No. 3 at the Port of Piraeus that COSCO Shipping took control over on October 1, 2010, per the concession agreement in 2008. Piraeus Port is the largest port in Greece and for the Balkans and Black Sea countries. COSCO Pacific is leasing and operating the Piraeus Port container terminals for 30 years under a build-operate-transfer (BOT) lease agreement with the Piraeus Port Authority S.A. (PPA), with an extendable five-year term. Under the concession, COSCO committed to invest over $700 million USD in upgrading the port's facilities. The proceeds of the CDB loan to PCT were used to be used by PCT to upgrade Pier 2 and complete the construction of Pier 3 at the Piraeus Container Port and thereby bring the capacity of the terminal up to 3.7 million TEUs, financing the BOT obligation. Construction was originally expected to be completed by the end of 2015. Implementation began in 2010 and the project was ultimately completed in 2015. Then, in 2015, the Piraeus Container Terminal 3 Expansion Project, financed by a CDB €130 million EUR loan (captured via Record ID#90694) commenced. COSCO's winning of the concession led to a series of planned strikes by dockworkers at Piraeus in October 2009; the strikes were an attempt to facilitate changes to COSCO's concession agreement by delaying the start of the agreement until after Greece's October 4, 2009, general election, which the PASOK party, which had vowed to renegotiate the team, was predicted to win. Previous strikes in 2008 were aimed at protesting the privatization of the container terminals at Piraeus, which COSCO had acquired via the concession. PCT began operations at Pier 2 on October 1, 2009, as planned, although with the assistance of PPA. The strikes ended on October 19, 2009, after negotiations. Additionally, on October 19, 2009, Aronis-Drettas-Karlaftis Consultant Engineers S.A. (ADK) filed a civil claim against COSCO Pacific Limited and PCT at the Court of First Instance of Athens in Greece alleging non-payment of fees for its design services and project management services; ADK claimed €5,800,000 (~$6.3 million USD-2015) in total. COSCO Pacific and PCT defended the material claims at the November 30, 2010 trial hearing. The Court of First Instance of Athens entirely dismissed the ADK's claim against COSCO Pacific and PCT and awarded the companies legal expenses worth €30,000 EUR (~$33,000 USD-2015); ADK appealed the case to the Court of Appeals of Athens, which upheld the dismissal and awarded part of legal expenses worth €600 EUR (~$700 USD-2015). ADK did not appeal to Supreme Civil and Criminal Court of Greece. COSCO later acquired a 67% stake in PPA in 2016, with the equity transfer completed in 2021. COSCO's involvement at Piraeus Port, including this project, has been hailed as the ‘flagship project’ of the Sino-Greek Construction of the Belt and Road Initiative (BRI).