(Yicai) Feb. 24 -- Conglomerate CK Hutchison Holdings, owned by Hong Kong’s richest person Li Ka-shing, said the Panamanian government’s forcible takeover of its port assets is unlawful and that it may pursue legal action, after authorities assumed control of two key terminals amid heightened US-China tensions over strategic infrastructure and national security.

Following the asset seizure, CK Hutchison’s shares [HKG: 0001] dropped 2.7 percent to HKD62.56 (USD8) today, still representing a nearly 60 percent surge in the past 12 months.

The Republic of Panama made direct physical entry into the Balboa and Cristobal terminals operated by CK Hutchison’s subsidiary Panama Ports yesterday, taking over administrative and operational control and excluding the subsidiary’s representatives, the Hong Kong-based company said in a statement. The move followed a decision last month by the Supreme Court of Justice of Panama denying Panama Ports’ operating rights to the terminals that connect Atlantic and Pacific trade routes.

CK Hutchison said it considers the takeover unlawful, adding that the actions by the Panama State have raised serious risks to operations, health, and safety at the Balboa and Cristobal terminals. All operations at the terminals were halted following the takeover yesterday, it said.

The Chinese company and Panama Ports will continue consulting legal advisors regarding the ruling and the takeover and will pursue all available recourse, including additional national and international legal proceedings against the Republic of Panama, its agents, and third parties “colluding with them,” to reserve all rights and recourse, it emphasized.

Yau Ying-wah, secretary for commerce and economic development of the Hong Kong Special Administrative Region, also lodged a protest with the Panamanian consul general in Hong Kong today, arguing that the takeover violated the spirit of the contract and stressing that the Hong Kong SAR government will firmly support and safeguard the legitimate rights and interests of Hong Kong enterprises overseas, according to an official statement.

Backdrop of Port Asset Sale

CK Hutchison obtained 30-year operating rights for the Balboa and Cristobal ports, located at opposite ends of the Panama Canal, in 1997 and renewed them in 2021 through 2047. Last year, Balboa and Cristobal handled 2.7 million and 1.2 million containers, respectively, accounting for 39 percent of the total container throughput of Panama’s five major ports, according to local statistics.

In March last year, amid pressure from US President Donald Trump on national security grounds, CK Hutchison announced plans to sell its major global port assets, including those in Panama, to a consortium led by US asset management giant BlackRock for USD19 billion.

Last July, CK Hutchison said it would invite investors from the Chinese mainland to join the consortium as important members and would not proceed with any transaction before obtaining approval from all relevant regulatory authorities and departments.

Editor: Emmi Laine