Divesting Port Property Due to a National Security Risk
We represented the Port of Long Beach in the forced divestiture of a leasehold interest in the Port by its most significant tenant, at the behest of the Committee on Foreign Investment in the United States (CFIUS).
When Orient Overseas International, the tenant at Middle Harbor, was acquired by COSCO, a China state-owned shipping line, CFIUS deemed this a national security risk and ordered the divestiture. The interest in the Port was put in a trust for national security reasons, and a sale process ensued. The potential buyers were identified, and the sale involved the approval by the Port and an amendment of its lease.
Late on April 29, 2019, Orient Overseas International announced to the Long Beach Container Terminal that it had been sold to a Macquarie Group infrastructure fund. This was after the Port of Long Beach reported it would be receptive to approving the assignment of its lease upon satisfaction of various conditions. The sale closed in October 2019 and the Preferential Assignment Agreement (similar to a lease) was amended.
The Chinese company sold its equity interest in the tenant for $1.78 billion.