South Korean Pusan port to sign $800 million expansion deal

South Korea's Pusan port, the world's fifth-biggest container port, is about to sign an $800 million financing deal to help expand the port, an official involved in the project and a bank source said on Wednesday. The port expansion is part of President Roh Moo-hyun's broad drive to make South Korea, which has Asia's third-biggest economy, a regional trade hub.
The port is also struggling to hold onto container traffic that is increasingly going to Chinese rivals.
Pusan Newport Co Ltd was due to sign a deal on December 16 to secure about $800 million in loans from a group of banks, an official at the company, who asked not to be named, told Reuters.
The firm was set up to build nine container piers initially, out of a total 30 in the expansion plan.
The total sum to be raised is to be split between two currencies: $465 million and 350 billion won ($333.9 million) won, the official added.
Banks involved in the deal include Bank of Tokyo-Mitsubishi, part of Mitsubishi Tokyo Financial Group, and South Korea's biggest lender, Kookmin Bank, he said.
"The existing port is so full that many ships divert to China instead, which is basically a loss to our nation," said the official. "Once you lose them, it's hard to get them back."
Currently, the port of Pusan handles between 6.7 million (twenty-foot equivalent unit) TEU and 10.4 million TEU of containers a year, Pusan port officials said.
Under the expansion plan, the government plans to add more than 8 million TEU of additional capacity to the port by 2011.
Shareholders in Pusan Newport include the Samsung Group, the Hanjin Group and CSX World Terminals (Hong Kong) Ltd, the US-based operator of Hong Kong's Kwai Chung container terminal pier No 3, the company official said.
CSX is in talks with a couple of bidders, including Singapore's PSA International Pte. Ltd to sell 25 percent of its stake in Pusan Newport as well as stakes in its terminals outside Korea, which are worth a combined $1 billion, he added.
Pusan is South Korea's second-biggest city located on the south-eastern tip of the Korean peninsula.