Post by HardTimeTrucker on Jul 26, 2009 7:13:31 GMT -5
More Firms Expected to Bid on VA Ports as Deadline Nears
By Robert McCabe
The Virginian-Pilot
July 26, 2009
NORFOLK,VA
Any bids to compete with CenterPoint Properties Trust's offer to take over the operations of state-owned port terminals in Hampton Roads are due by 10 a.m. Monday.
As of Friday, the only bid on the table was the Chicago-area industrial real estate firm's, submitted in March.
"We expect that there will be competing proposals," said Greg Edwards, director of external affairs for the Virginia Port Authority, adding that he knew of no other bids.
CenterPoint values the "strategic partnership" it has proposed at $3.5 billion in today's dollars but $8.9 billion over the 60-year life of the deal, after which control of the port assets would revert to the state. Those assets include the Port Authority marine terminals in Norfolk, Portsmouth and Newport News.
CenterPoint's offer, if accepted, would be the biggest privatization deal in the U.S. port industry within the past three years, according to a May report by researchers at RREEF, an investment unit of Deutsche Bank.
Some port facilities worldwide have long been privately operated, but publicly owned port terminals attracted some eye-popping privatization deals in the years preceding last fall's economic meltdown. Such lucrative offers can prove attractive to cash-strapped states struggling with infrastructure and other budget needs.
Despite the downturn, several large port operators, backed by companies with even deeper pockets, may be poised to make competing bids to run the state-owned terminals in the port of Hampton Roads. While rumors have circulated for weeks about companies that may be interested in bidding, questions to possible interested parties have been met with a "no comment" or no response at all.
Last week, the Daily Press in Newport News reported that The Carlyle Group and SSA Marine were likely to bid.
Chris Ullman, a Carlyle spokesman, declined to comment, but Virginia Secretary of Transportation Pierce Homer said Friday that "we have been told directly by Carlyle that they plan to submit a bid."
Based in Washington, Carlyle is a private equity firm managing $84.5 billion.
SSA Marine, based in Seattle, operates port terminals and provides stevedoring services - ship loading and unloading - at ports around the Americas, but not Hampton Roads, and in Vietnam.
"Corporately, we don't provide any comment on current or potential transactions, or speculation," Bob Watters, SSA's vice president of business development, said Thursday.
Port privatization deals typically span decades and can run into the billions of dollars.
In late 2006, the Ontario Teachers' Pension Plan announced that it would buy two marine terminals at the Port of New York/New Jersey, along with two others in British Columbia, for $2.4 billion.
In March 2007, after a furor tied to security fears, Dubai-based DP World sold off its U.S. shipping terminal business to Ports America, an affiliate of now-troubled insurance giant American International Group Inc. In a deal valued at more than $1 billion, Ports America acquired a handful of terminals in ports including New York/New Jersey, Philadelphia, Baltimore, Miami and New Orleans, according to a Newark Star-Ledger report.
That month, RREEF Infrastructure announced it was buying Maher Terminals, the largest container terminal operator in the Port of New York/ New Jersey, as part of a deal that included Maher's operation at the Port of Prince Rupert in British Columbia.
While Carlyle and SSA Marine may be bidding, Ports America may be the most likely candidate. It has been involved in recent deals on the East and West Coasts.
In March, Ports America won a 50-year concession and lease agreement to upgrade and operate five container berths at the Port of Oakland. The deal was valued at about $700 million.
On June 30, Ports America got the OK from the Maryland Port Administration to bid on entering a public-private partnership to run the Port of Baltimore's Seagirt Marine Terminal.
Ceres Terminals Inc./Alinda Capital Partners LLC is the other qualified bidder. Ceres, a stevedoring company, operates at all three of the Virginia Port Authority's marine terminals, renting container cranes as needed, according to the New Jersey-based firm's Web site.
A spokeswoman for Ports America said the company would not comment on the Hampton Roads bidding.
The firm's Web site states that Ports America already operates in Hampton Roads through a joint venture with CP&O, which performs stevedoring services at all of the Port Authority's major facilities.
The port of Hampton Roads has some key natural advantages, including a deep channel, ice-free conditions year-round, and being only 18 miles from the open sea, according to Ports America's Web site.
"Hampton Roads continues to develop and enhance these natural advantages to ensure effectiveness in an increasingly competitive industry," the Web site states. "State-of-the-art terminal facilities, an efficient labor force and excellent intermodal capabilities are a result of these on-going enhancements."
Whatever its advantages, the port of Hampton Roads, in the long run, is probably going to need a private infusion of capital to continue to invest in its infrastructure, said John Martin, a Pennsylvania-based port economist.
Aaron Ellis, with the American Association of Port Authorities, based in Alexandria, cited the costs of complying with security and environmental requirements and continuing to invest in infrastructure.
"Ports tend to have a lot of different needs," he said, adding, "It's difficult to find public money anymore."
Private equity may be scarce now too after the global economic downturn, Martin said. He cited Ports America, RREEF and SSA Marine among other possible bidders but said he didn't know that any particular firm was bidding.
"There's not a lot of companies that have a lot of money right now," Martin said. "A lot of your players are no longer the same players. The horizon has changed."
Given the falloff in cargo volumes and cutbacks at the Virginia port and others across the country, some may wonder why anybody would want to sink a billion dollars or more into owning or running a port.
Earlier this month, Virginia International Terminals Inc., the Port Authority's nonprofit management arm, announced cost-cutting moves after its year-over-year container volume fell 20 percent and its income dropped 25.6 percent in the fiscal year ended June 30.
"The situation is serious," wrote Joseph A. Dorto, president and CEO of VIT, in a memo to his 452-person work force. "The outlook for our industry is that it will not recover until sometime in 2011 or 2012."
Yet as grim as things may appear now, Hampton Roads is well-positioned for future growth, according to the RREEF report.
It ranked the port-related opportunities in Hampton Roads No. 4 among ports in North and South America - behind Balboa in Panama; Savannah, Ga.; and New York/New Jersey.
Hampton Roads scored higher than all five big U.S. West Coast ports listed - Los Angeles, Long Beach and Oakland in California, and Tacoma and Seattle in Washington.
Los Angeles ranked fif th and Long Beach ranked seven th. While there are more than 300 U.S. ports, about 40 percent of U.S. container cargo arrives at those two ports, the RREEF report stated.
Those ports, now considered the major gateway for Asian-produced consumer goods in the United States, aren't expected to hold on to that traffic for long, according to the report.
Though the West Coast ports primarily compete among themselves for trans-Pacific trade, the completion of the Panama Canal expansion in 2014 "will broaden this competitive circle to include East Coast ports as well," the RREEF researchers stated.
Assuming new bids are received on Monday, an announcement will be made identifying the bidders, said Homer, the state transportation secretary.
The release of any information beyond that will be up to the bidders, he added.
Homer and his staff will then review the new bids to ensure they comply with state law. That process could take as long as 30 days, said John Milliken, chairman of the Port Authority's Board of Commissioners.
Once the bids are vetted, Homer's office will notify the Port Authority about which offers have been accepted for further review. Homer would then appoint an independent panel to review the offers and advise the Port Authority board, Milliken said.
One or more public hearings probably would be part of the panel's review, he said.
The panel would eventually recommend which bids should move from the conceptual phase to a more detailed phase, involving direct negotiations.
Milliken said he doubted that the panel would be able to wrap up its job by the end of the year.
The final decision on which bid, if any, to select would rest with the Port Authority board, Milliken said.
Robert McCabe,
(757) 446-2327,
robert.mccabe@pilotonline.com
By Robert McCabe
The Virginian-Pilot
July 26, 2009
NORFOLK,VA
Any bids to compete with CenterPoint Properties Trust's offer to take over the operations of state-owned port terminals in Hampton Roads are due by 10 a.m. Monday.
As of Friday, the only bid on the table was the Chicago-area industrial real estate firm's, submitted in March.
"We expect that there will be competing proposals," said Greg Edwards, director of external affairs for the Virginia Port Authority, adding that he knew of no other bids.
CenterPoint values the "strategic partnership" it has proposed at $3.5 billion in today's dollars but $8.9 billion over the 60-year life of the deal, after which control of the port assets would revert to the state. Those assets include the Port Authority marine terminals in Norfolk, Portsmouth and Newport News.
CenterPoint's offer, if accepted, would be the biggest privatization deal in the U.S. port industry within the past three years, according to a May report by researchers at RREEF, an investment unit of Deutsche Bank.
Some port facilities worldwide have long been privately operated, but publicly owned port terminals attracted some eye-popping privatization deals in the years preceding last fall's economic meltdown. Such lucrative offers can prove attractive to cash-strapped states struggling with infrastructure and other budget needs.
Despite the downturn, several large port operators, backed by companies with even deeper pockets, may be poised to make competing bids to run the state-owned terminals in the port of Hampton Roads. While rumors have circulated for weeks about companies that may be interested in bidding, questions to possible interested parties have been met with a "no comment" or no response at all.
Last week, the Daily Press in Newport News reported that The Carlyle Group and SSA Marine were likely to bid.
Chris Ullman, a Carlyle spokesman, declined to comment, but Virginia Secretary of Transportation Pierce Homer said Friday that "we have been told directly by Carlyle that they plan to submit a bid."
Based in Washington, Carlyle is a private equity firm managing $84.5 billion.
SSA Marine, based in Seattle, operates port terminals and provides stevedoring services - ship loading and unloading - at ports around the Americas, but not Hampton Roads, and in Vietnam.
"Corporately, we don't provide any comment on current or potential transactions, or speculation," Bob Watters, SSA's vice president of business development, said Thursday.
Port privatization deals typically span decades and can run into the billions of dollars.
In late 2006, the Ontario Teachers' Pension Plan announced that it would buy two marine terminals at the Port of New York/New Jersey, along with two others in British Columbia, for $2.4 billion.
In March 2007, after a furor tied to security fears, Dubai-based DP World sold off its U.S. shipping terminal business to Ports America, an affiliate of now-troubled insurance giant American International Group Inc. In a deal valued at more than $1 billion, Ports America acquired a handful of terminals in ports including New York/New Jersey, Philadelphia, Baltimore, Miami and New Orleans, according to a Newark Star-Ledger report.
That month, RREEF Infrastructure announced it was buying Maher Terminals, the largest container terminal operator in the Port of New York/ New Jersey, as part of a deal that included Maher's operation at the Port of Prince Rupert in British Columbia.
While Carlyle and SSA Marine may be bidding, Ports America may be the most likely candidate. It has been involved in recent deals on the East and West Coasts.
In March, Ports America won a 50-year concession and lease agreement to upgrade and operate five container berths at the Port of Oakland. The deal was valued at about $700 million.
On June 30, Ports America got the OK from the Maryland Port Administration to bid on entering a public-private partnership to run the Port of Baltimore's Seagirt Marine Terminal.
Ceres Terminals Inc./Alinda Capital Partners LLC is the other qualified bidder. Ceres, a stevedoring company, operates at all three of the Virginia Port Authority's marine terminals, renting container cranes as needed, according to the New Jersey-based firm's Web site.
A spokeswoman for Ports America said the company would not comment on the Hampton Roads bidding.
The firm's Web site states that Ports America already operates in Hampton Roads through a joint venture with CP&O, which performs stevedoring services at all of the Port Authority's major facilities.
The port of Hampton Roads has some key natural advantages, including a deep channel, ice-free conditions year-round, and being only 18 miles from the open sea, according to Ports America's Web site.
"Hampton Roads continues to develop and enhance these natural advantages to ensure effectiveness in an increasingly competitive industry," the Web site states. "State-of-the-art terminal facilities, an efficient labor force and excellent intermodal capabilities are a result of these on-going enhancements."
Whatever its advantages, the port of Hampton Roads, in the long run, is probably going to need a private infusion of capital to continue to invest in its infrastructure, said John Martin, a Pennsylvania-based port economist.
Aaron Ellis, with the American Association of Port Authorities, based in Alexandria, cited the costs of complying with security and environmental requirements and continuing to invest in infrastructure.
"Ports tend to have a lot of different needs," he said, adding, "It's difficult to find public money anymore."
Private equity may be scarce now too after the global economic downturn, Martin said. He cited Ports America, RREEF and SSA Marine among other possible bidders but said he didn't know that any particular firm was bidding.
"There's not a lot of companies that have a lot of money right now," Martin said. "A lot of your players are no longer the same players. The horizon has changed."
Given the falloff in cargo volumes and cutbacks at the Virginia port and others across the country, some may wonder why anybody would want to sink a billion dollars or more into owning or running a port.
Earlier this month, Virginia International Terminals Inc., the Port Authority's nonprofit management arm, announced cost-cutting moves after its year-over-year container volume fell 20 percent and its income dropped 25.6 percent in the fiscal year ended June 30.
"The situation is serious," wrote Joseph A. Dorto, president and CEO of VIT, in a memo to his 452-person work force. "The outlook for our industry is that it will not recover until sometime in 2011 or 2012."
Yet as grim as things may appear now, Hampton Roads is well-positioned for future growth, according to the RREEF report.
It ranked the port-related opportunities in Hampton Roads No. 4 among ports in North and South America - behind Balboa in Panama; Savannah, Ga.; and New York/New Jersey.
Hampton Roads scored higher than all five big U.S. West Coast ports listed - Los Angeles, Long Beach and Oakland in California, and Tacoma and Seattle in Washington.
Los Angeles ranked fif th and Long Beach ranked seven th. While there are more than 300 U.S. ports, about 40 percent of U.S. container cargo arrives at those two ports, the RREEF report stated.
Those ports, now considered the major gateway for Asian-produced consumer goods in the United States, aren't expected to hold on to that traffic for long, according to the report.
Though the West Coast ports primarily compete among themselves for trans-Pacific trade, the completion of the Panama Canal expansion in 2014 "will broaden this competitive circle to include East Coast ports as well," the RREEF researchers stated.
Assuming new bids are received on Monday, an announcement will be made identifying the bidders, said Homer, the state transportation secretary.
The release of any information beyond that will be up to the bidders, he added.
Homer and his staff will then review the new bids to ensure they comply with state law. That process could take as long as 30 days, said John Milliken, chairman of the Port Authority's Board of Commissioners.
Once the bids are vetted, Homer's office will notify the Port Authority about which offers have been accepted for further review. Homer would then appoint an independent panel to review the offers and advise the Port Authority board, Milliken said.
One or more public hearings probably would be part of the panel's review, he said.
The panel would eventually recommend which bids should move from the conceptual phase to a more detailed phase, involving direct negotiations.
Milliken said he doubted that the panel would be able to wrap up its job by the end of the year.
The final decision on which bid, if any, to select would rest with the Port Authority board, Milliken said.
Robert McCabe,
(757) 446-2327,
robert.mccabe@pilotonline.com