Avondale Due Diligence Period Extended To August 31
Port of South Louisiana (PortSL) CEO Paul Matthews shocked the Louisiana maritime world January 12 when he announced that his port had entered into an agreement with T. Parker Host to purchase the former Avondale Shipyard, now marketed as Avondale Global Gateway. Host purchased the site in 2018 for $60 million, with total investment since eclipsing $100 million.
News of the agreement—which carried a price tag of $445 million and would retain Host as the terminal operator—came as a surprise to port officials in New Orleans and to Louisiana Gov. John Bel Edwards, none of whom were aware of the talks between PortSL and Host. Avondale is located in Jefferson Parish, which is within the Port of New Orleans’ three-parish jurisdiction, while the Port of South Louisiana’s jurisdiction includes the parishes of St. Charles, St. John the Baptist and St. James.
The agreed-upon price, though, was based on an appraisal that focused on cash flow projections and not existing business at the terminal, and since the announcement in January, PortSL has engaged a host of consultants and appraisers as part of a due diligence period to assess the true value of the property and the financial feasibility of the deal and to identify environmental issues at the site. That effort, according to a statement from the port in April, is to ensure those cash flow projections “are reliable and sufficient to support the debt service of the bonds.”
In early May, the port announced that Host had granted an extension of the due diligence period through May 31 “to give all consultants more time to complete their work.”
Now, the port has announced another extension, this time through August 31.
“The property was placed under contract at an appraised value,” the port said in a statement. “The final price will be negotiated based upon the results of the feasibility analysis.”
“The Port of South Louisiana’s purchase of the Avondale facility has the potential to transform South Louisiana and position us as a global commerce leader,” Matthews said. “We are taking our time to analyze every aspect of this potential acquisition. We have retained multiple experts to conduct physical and financial analyses. We will ensure the state of Louisiana gets the best deal possible. Once the feasibility analysis is complete, we will negotiate final terms of the acquisition, including price. The additional time Host is providing PortSL allows our experts to complete their work.”
Adam Anderson, chairman and CEO of Host, stressed the company remains committed to working out a deal with the Port of South Louisiana.
“We bought Avondale Global Gateway in 2018 because we believed in the possibilities for economic growth at this site and on the West Bank of Jefferson Parish,” Anderson said in the joint release announcing the time extension. “In only five years, we transformed the former shipyard into a center of multimodal commerce. Under the Port of South Louisiana’s ownership and our management as terminal operator, Avondale Global Gateway will be structured to again serve as an anchor of our region’s economy for generations to come.”