Highstar-backed Ports America wins Baltimore deal

The company will operate the Seagirt Marine Terminal for 50 years and build and design a new 50-foot berth for vessels at the port, estimated to cost about $105.5m. Maryland Governor Martin O’Malley said the deal 'is about three things: jobs, jobs and more jobs'.

Ports America, a marine terminal operator owned by New York infrastructure private equity firm Highstar Capital, has won a 50-year contract to operate a marine terminal at the Port of Baltimore and build an additional berth at the port, the second such contract the company has won this year.

Under the terms of the agreement, Ports America will operate the 284-acre Seagirt Marine Terminal in Baltimore and design and build a new, 50-foot berth for vessels at the port, estimated to cost approximately $105.5 million. In exchange, it will receive an undisclosed annual payment every year for fifty years plus all net revenues from the operations of the terminal, which will continue to be owned by the State of Maryland.

Maryland, in turn, will receive an upfront payment of more than $100 million as part of the deal, Maryland Governor Martin O’Malley said in a statement.

O'Malley: jobs, jobs and
more jobs

Governor O’Malley, whose state is suffering from a 7.1 percent unemployment rate, said the deal “is about three things: jobs, jobs and more jobs”. He claimed the contract will bring 5,700 jobs to Baltimore, generate $15.7 million in annual tax revenues for Maryland, and a total of $1.3 billion in economic benefits to the state over the next 50 years.

For Ports America, the deal marks the second such victory so far this year. In March, the company won a similar big-ticket, 50-year concession for a container terminal at the Port of Oakland in California. Ports America beat out four other bidders for the $700 million contract, including terminal operators Maher Terminals and APM Terminals, ports investor Hutchinson Port Holdings and a consortium of shipping lines led by Japan’s Kawasaki Kisen Kaisha.

In bidding for the Seagirt contract, Ports America won out against cross-town rival Alinda Capital Partners and its partner, terminal operator Ceres Terminals.

Ports America has been a portfolio company of Highstar Capital since March 2007. Highstar bought Ports America from Dubai Ports World, which needed to sell the company because a national security controversy over Dubai’s foreign status prevented it from acquiring the whole of Ports America’s predecessor company, P&O Ports. Once Highstar won the auction for P&O’s North American operations, which it rebranded as Ports America, it merged the company two other US-based port operators, AMPORTS and MTC Holdings, to create what is now the largest port terminal operator in the US.

Highstar financed all three acquisitions with capital from its third and largest infrastructure fund – Highstar Capital III – which closed on $3.5 billion in October 2007.

Highstar has now begun marketing its fourth fund, which is also targeting $3.5 billion.