Port bids unveiled

Published 9:33 pm Thursday, August 23, 2012

APM Terminals Virginia, one component of the state’s port facilities, which three private groups are vying to operate. Early proposals from two of those groups were made public on Wednesday.

Alternative proposals to APM’s unsolicited bid to operate Virginia’s port facilities have finally been revealed.

The two groups entering the fray are Carlyle Infrastructure Partners, L.P., an infrastructure investment unit of the Carlyle Group, and RREEF America L.L.C., part of the Deutsche Bank Group.

Both groups have submitted conceptual proposals to operate Norfolk International Terminals, Portsmouth Marine Terminal, Newport News Marine Terminal, The Virginia Inland Port and APM Terminals Virginia.

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CIP is offering a 48-year deal, including up-front investment, fixed annual payments and a profit-sharing strategy with the Virginia Port Authority, worth a combined estimated $1.8 billion to $2.1 billion to the state.

The group says it is in discussions with “world-class terminal operators” interested in long-term contracts to run port facilities.

Early modeling, CIP’s proposal says, involves an up-front investment of $250 million to $300 million, annual payments of $35 million to $45 million, and profit-sharing of 20 to 30 percent.

“Under CIP’s alternative proposal, VPA would continue to be a public sector entity with the primary role of monitoring, securing and promoting general economic development,” according to the proposal.

Carlyle’s proposal raises the possibility of investing over $1.2 billion in port facilities over the 48 years, and says that Hampton Roads municipalities would receive payments either from property taxes or payments in line with their current revenues from port facilities.

Meanwhile, under RREEF’s proposal, Maher Terminals, which independently operates the largest container terminal in the Port of New York and New Jersey, would operate the Port of Virginia for a group of investors.

Maher is connected to RREEF and an indirectly owned subsidiary of Deutsche, the proposal states.

The 50-year deal would be worth an estimated $4.661 billion, involving a $400-million up-front payment, rent reimbursement payments for APMT; services, debt-coverage and tax payments, and a $942 million capital spend.

“By converting VIT to a private entity, the Commonwealth and Hampton Roads communities … will experience an increase in corporate income and property tax receipts, as well as other fees (expected) to grow over the term … worth an estimated $372 million in net present value,” the proposal states.

Both groups in their proposals cite their respective experience in operating port facilities domestically and overseas.

The proposals were presented to a special public meeting of the authority board on Wednesday, where VIT’s plans to grow container traffic were reportedly presented during a closed session.

VIT has been asked to make its case for being allowed to continue operate port facilities.

The unsolicited proposal from APM, a subsidiary of Danish shipping giant Maersk, was received by Virginia in April, under its Public-Private Transportation Act.

APM says its offer is worth up to an estimated $3.9 billion to the state over 48 years, and would include a major expansion of APM Terminals Virginia, ownership of which the company would also turn over to Virginia.

The proposals are scheduled for debate today during a special session of the state legislature called by Gov. Bob McDonnell, and State Transportation Secretary Sean Connaughton has said that the authority would vote on a recommendation of business terms by the end of November, and, early next year, on an agreement to implement terms.