NSW to take Newcastle port indications on Monday

The New South Wales government will on Monday call for indications of interest from potential buyers of the Port of Newcastle, an asset the state values at $700 million.

Australia’s oldest port, where coal exports represent 90 per cent of total throughput tonnage, is expected to be sold before May, in time to bolster the NSW budget. The government wants to return to surplus by 2015.

After indications of interest are received, documents on the port’s operations and finances will be sent out before indicative bids are called for, most likely in January.

A short list of bidders will be then be decided. Those making the shortlist will likely have until the end of March to make final offers.

Superannuation funds, local infrastructure investors, Japanese trading houses and Asian companies are expected to be among the indicative bidders for the port’s 99-year lease. Half the coal that passes through its facilities goes to Japanese power stations.

The NSW government will use $340 million from the proceeds of the sale of the port to invest in Newcastle. That's on top of $120 million the state has committed to the revitalisation  of the city’s central business district. The government is considering a light-rail network for the Hunter region.

The use of the funds will be coordinated through the Hunter Infrastructure and Investment Fund, a capital pool that will have $690 million.

Morgan Stanley is managing the port sale on behalf of the state government and is currently undertaking a road show of the port to potential investors.