A Hong Kong conglomerate that had agreed to sell its two ports at the Panama Canal said Monday it may seek a Chinese investor to join a consortium of buyers, a move that could please Beijing but bring more U.S. scrutiny to the geopolitically fraught deal.

CK Hutchison Holdings’ initial plan to sell port assets in dozens of countries to a group that includes U.S. investment firm BlackRock Inc. pleased U.S. President Donald Trump, who has alleged that China interferes with the critical shipping lane’s operations in Panama. However, the deal apparently angered Beijing and drew a review by Chinese anti-monopoly authorities.

After months of uncertainty brought by tensions between Washington and Beijing, Hutchison said in a statement Monday that the exclusive negotiations period with the consortium had expired.

However, it added “the Group remains in discussions with members of the consortium with a view to inviting major strategic investor from the PRC to join as a significant member of the consortium,” referring to the People’s Republic of China.

It said it needed to change the membership of the consortium and the structure of the transaction for the deal to be able to pass reviews by “all relevant authorities.”

In Beijing, a Chinese official said the government had noted the announcement but did not comment directly on it.

“The Chinese government will conduct supervision in accordance with the law, firmly safeguard national sovereignty, security and development interests, and maintain market fairness and justice,” Foreign Ministry spokesperson Guo Jiakun said at a daily briefing.

A Hutchison subsidiary has operated the ports of Balboa and Cristobal at both ends of the Panama Canal since 1997.

The awkward position Hutchison found itself in for months highlights the challenges Hong Kong business elites face in navigating Beijing’s expectations of national loyalty, especially when relations between China and the United States are strained.

CK Hutchison is owned by the family of Hong Kong’s richest man, Li Ka-shing.

It announced March 4 that it would sell all its shares in Hutchison Port Holdings and in Hutchison Port Group Holdings to the consortium that also includes BlackRock subsidiary Global Infrastructure Partners and Terminal Investment Limited, a subsidiary of the Mediterranean Shipping Company.

A Beijing-backed newspaper in Hong Kong posted scathing commentaries about the deal, with one describing it as a betrayal of all Chinese.

Chinese government offices overseeing Hong Kong affairs reposted some of the commentaries, widely seen as an indication of the Chinese leaders’ stance.

In May, Hutchinson co-managing director, Dominic Lai told shareholders that Terminal Investment was the main investor. Its parent company is led by Italian shipping scion Diego Aponte, whose family reportedly has a longstanding relationship with Li’s.

The initial deal, valued at nearly $23 billion including $5 billion in debt, would have given the consortium control over 43 ports in 23 countries, including the two at the Panama Canal. That agreement would have also required approval from Panama’s government.

The deadline for the exclusive negotiation period ended on Sunday.

The Panamanian government maintains it has full control over the canal and that the operation of the ports by Hutchison does not mean Chinese control of it.

Source: AP