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Published: 7 August 2010
José Mestre on drugs charges
The managing director of Spanish port operator Tercat was detained by the police at the end of June for alleged drug smuggling offences. Speculation in Spain in rife as to what Hutchison will do next
Hutchison Port Holdings bought a 70% stake in Terminal de Catalunya (Tercat), the Barcelona-based container terminal operator, from the Mestre family in May 2006, with an option to acquire the remaining 30% should it wish to do so.
Hutchison took over the existing terminal and then Tercat won the concession to develop and operate a new container terminal at Moll Prat, the new development zone of the Barcelona port authority (APB).
Following the arrest Hutchison replaced Mestre as managing director of Tercat with Guillermo Belcastro, the company's finance director.
Whether this can protect Tercat's reputation from further damage is open to question, given the gravity of the charges against Mestre. He is accused of using the facility to import 200kg of pure cocaine, discovered in three 20ft containers with cast iron ingots from Argentina and with a "street value" of E100M.
Hutchison would be within its rights to cancel the original contract that it signed with the Mestre family, since it could have had no idea the terminal was allegedly being used for illegal activities.
However, José Mestre's assets have been frozen, which could mean Hutchison could lose out to other creditors were the company to be wound up.
It also begs the question about the future of Moll Prat, where Tercat is investing E500M in an automated terminal covering 100 hectares and has awarded contracts for the cranes and yard systems.
Hutchison would be equally within its rights to exercise its option to take control of the outstanding 30% at equity at zero cost, arguing that Mestre had reneged on terms in the original contract and that the illegal use of the terminal had undermined the existing value of its own equity.
For its part, APB has made it clear that Mestre's arrest need not impact negatively on the concession, since HPH remains the majority shareholder.