Hutchison, Carlyle final bidders for 75-year Galveston terminal

HONG KONG terminal operator Hutchison - the world's biggest - and global investment firm, Carlyle Group, are the surviving bidders of 80 companies for a 75-year lease on a Port of Galveston terminal.


The deal under review by the Galveston Wharves' Board of Trustees will be the first US port to lease its total port operations to private operators in a lease term much exceeding single terminal leases such as Oakland and Baltimore by Port America that run for 50 years.


Of the 17 firms that signed confidentiality agreements "only one bidder was determined to be sufficiently qualified and willing to offer a sufficient return to the trustees in exchange for the 75 year master lease," said the port's financial advisor BMO Capital Markets, an affiliate of BMO Bank of Montreal.


The port authority will retain only the tariff collection and security functions, said port director Steven Cernak, reported the Houston Chronicle.


In exchange for the lease, Carlyle and Hutchison agreed to pay off the port's estimated debt of US$60 million, ongoing payments that includes revenue/profit sharing from cruise and freight operations.


The 75-year lease, set out by BMO, covers land on Pelican Island, adjacent to the port, for a potential container terminal reviewed by AECOM which looked at three possible locations on the island.


The Los Angeles-based AECOM costed the building of a five-berth terminal capable of handling 3.4 million TEU annually at US$1.34 billion to $1.63 billion depending on location, and excluding handling equipment such as rubber tyre gantry cranes and reach stackers.


It also includes a 100-acre terminal to be developed on the western end of the south side of the Galveston Ship Channel, the development of a 20-acre roll-on/roll-off terminal on the eastern end of the south side of the Galveston Ship Channel and continuing cruise terminals, associated assets and port operations.
(Source:http://www.schednet.com)