APM to take on Transnet over pier tender

Transnet ignored two opinions that it erred in allowing Philippines-based International Container Terminal Services Incorporated (ICTSI) to calculate its solvency ratio using its market capitalisation in its successful bid to win a 25-year contract to develop and manage the key Durban Pier Two terminal. A Business Day report says the methodology used to calculate ICTSI’s solvency and whether it met the tender requirements will take centre stage next week when losing bidder APM Terminals squares off with Transnet and ICTSI at the KZN High Court (Durban), seeking to set the contract aside. Expert opinions sought by Transnet – including its own internal auditing report – warned that ICTSI’s use of market capitalisation to shore up its solvency ratio fell short of the tender’s requirements. Transnet sought the opinions after APM Terminals, a subsidiary of Danish logistics major AP Moller-Maersk, challenged the parastatal to show cause why it allowed ICTSI to pass the first hurdle of the tender, the request for qualifications which demanded a solvency ratio of 0.4, when ICTSI’s solvency came in at 0.24 according to its annual financial statements for the 2021 financial year. APM said the request for qualifications demanded that the solvency criterion was to be satisfied with reference to annual financial statements, not market capitalisation. Transnet lawyers ENSafrica wrote to the group in September 2023 telling it that an opinion from Mettle Specialised Solutions was that it was unacceptable for a company’s market capitalisation to be used as ‘total equity’ to calculate a company’s solvency ratio. This was followed by a Transnet internal audit finding that ICTSI’s solvency ratio during the bidding process fell way short of the requirements. Transnet’s internal audit report, together with Mettle Specialised Solutions opinion, saw a change in heart from Transnet with ENSafrica in November issuing a notice of possible disqualification.

Full Business Day report