Private port firm sells a big stake

One of the region's most powerful and most private family companies, Carrix, sold a 49 percent stake this week to a Goldman Sachs investment fund. The impact should be interesting, if we can figure out what it is.

Carrix is the holding company for the better-known SSA Marine, which runs container terminals at the Port of Seattle and has some 120 marine and rail operations worldwide.

It's a big fish, if not a whale, ranking ninth among the top 10 port operators globally, according to Drewry Shipping Consultants of London.

Carrix/SSA's owner-operators for the past 17 years, the Smith/Hemingway family, on Tuesday completed the sale of nearly half the business to Goldman Sachs Infrastructure Partners.

Carrix won't even disclose its approximate revenues, so it certainly isn't talking about the sale price.

"Obviously it's in the hundreds of millions," says Neil Davidson, research director at Drewry, which does market studies and other consulting for Carrix and its competitors.

In June 2006 Bloomberg News reported that three investment groups were vying to buy SSA with bids of at least $2 billion. (Carrix CEO Jon Hemingway cryptically told The Seattle Times at the time that "people have no idea what we're really up to.")

Infrastructure companies, from cargo terminals to airports and toll roads, have remained a prized commodity in the year since then.

A Standard & Poor's report last week called them "one of the hottest asset classes," with many acquisitions done at "eye-watering" prices.

Selling a 49 percent slice lets the family "diversify their investment portfolio" while keeping a controlling interest, says Bob Watters, SSA's vice president and director of business development. "They feel comfortable with their position now and want to stay involved and continue to grow it."

He insists no further changes in ownership are in the cards — no public stock offering, for instance — although Goldman Sachs is not the kind of investor that typically sits on its assets for 17 years.

A Goldman Sachs representative says the firm won't elaborate on earlier statements that said it is "excited" about helping the company expand.

Davidson says big investors are just waking up to the steady profitability of running the world's container terminals.

"For many years it's been a well-kept secret," he says. "Companies like SSA realized that early on."

SSA has been most successful in the U.S. and Central and South America, Davidson says. Even without backing from someone like Goldman Sachs, "they have proved they have the expertise and financial muscle to expand internationally." But Goldman's added expertise in financial engineering won't hurt.

The next stage of growth for Carrix/SSA comes from a globe-spanning list of new infrastructure projects under way. In Seattle SSA leases terminals from the port, but in many places it builds its own facilities.

"We have $2 billion worth of projects in the pipeline right now, and those are projects that are coming close to fruition," Watters says.

Among them:

• Two in Vietnam, one in Ho Chi Minh City (formerly Saigon) and another in Cai Lan, the only deepwater port in the country's north;

• A recently announced $300 million terminal in Tacoma, in partnership with the Puyallup tribe;

• A couple of terminals in Mexico, "and we're looking at a couple of projects in Europe."

Penny-stock abuser enters guilty plea

An Arizona man responsible for an elaborate pump-and-dump scheme that jacked up the stock of tiny, Spokane-based Courtside Products to ludicrous levels in 2005 has pleaded guilty to securities fraud and electronic mail fraud, the Securities and Exchange Commission announced last week.

Courtside had four employees and $500,000 in sales, according to a report by the Times in 2005, when the owner was searching for expansion capital.

She was put in touch with Michael Paloma, who arranged for Courtside to issue millions of shares to entities he controlled. He and accomplices touted the unregistered shares through blast faxes and e-mails.

The trading he orchestrated in the Pink Sheets marketplace carried the price from virtually nothing to 80 cents a share.

At that level, the little maker of athletic bags had a market capitalization greater than Columbia Bancorp.

After three months of trading, the SEC slammed the brakes on the abuse, making Courtside the first example in what officials described as a new drive to halt abuse of unregistered stock.

Two other companies also were suspended from trading in short order.

But too often, such transgressions don't get pursued very far by regulators who are overworked and understaffed.

Paloma got the usual slap-on-the-wrist civil settlement, recently promising not to break the law in the future and to give up almost $3 million in profits.

But this time the SEC and the Justice Department pursued a criminal case as well. The two counts to which Paloma pleaded guilty carry potential sentences of five years each.