The firm is 55 percent owned by China Merchant Holdings International, a state run Chinese firm, 30 percent by private listed Aitken Spence and 15 percent by the Sri Lanka Ports Authority, a Sri Lanka state-run firm.
The firm was negotiating a 350 million US dollars with China Development Bank (CDB) to build the terminal with its project cost escalating to 600 million dollars from an original plan of 450 million dollars, a source familiar with the matter said.
But the CDB loan had fallen through after it insisted on a Sri Lanka government guarantee for its loan. The project which was to be on a 35 year build-operate-transfer concession had specified from its initial stages that there would be no state guarantees.
The main Chinese partner had said it was willing to pump in 350 million dollars to the project provided other partners also chip in. Aitken Spence was originally expected to inject 45 million US dollars as equity.The new commitment would have been a further 130 million US dollars, which was beyond the capacity of the firm, which may force it to pull out of the consortium, source said.
In that event the terminal would be 85 percent owned by China Merchant Holdings. SLPA is expected to put in its share.
The terminal is being built by China Harbhour Engineering Corporation, which won the bid in a race with another Chinese firm.