PortSL Delays Bond Commission Application, Avondale Acquisition

The Port of South Louisiana (PortSL) is delaying its application to the Louisiana State Bond Commission for approval to sell revenue bonds to help cover the cost of acquiring Avondale Global Gateway from T. Parker Host. The port announced the move October 10, less than three weeks after the bond commission’s September 21 meeting, which saw commissioners question port officials on everything from the sale price for the property to the legality of PortSL owning a terminal outside of its jurisdiction.

The port, which is responsible for port activities in St. Charles, St. James and St. John the Baptist parishes, announced plans to purchase the property, located on the east bank of Jefferson Parish, in January. At the time, the agreed-upon purchase price was $445 million, nearly 2.8 times the amount Host has invested in the property to transform it from a shipyard to a multimodal terminal.

The announcement caught many in the state by surprise, including Louisiana Gov. John Bel Edwards and officials at the Port of New Orleans, which has jurisdiction in Jefferson Parish and had previously studied the commercial feasibility of the site.

After a lengthy due diligence process, PortSL CEO Paul Matthews announced to the port’s board of commissioners in August that he and Host had agreed to a lower price for the 254-acre site: $330 million. Terms called for $280 million for the purchase to come through revenue bonds, along with a $50 million note from Host. Commissioners unanimously voted in favor of the amended purchase agreement, which also included a $1.5 million deposit to Host.

Still, the state’s bond commissioners weren’t sold on the deal, and after a lengthy and contentious discussion at the bond commission’s meeting, Matthews agreed to defer the measure. Bond commissioners—particularly State Treasurer John Schroder, a candidate for governor, and Louisiana Commissioner of Administration Jay Dardenne—questioned whether the port ought to defer the measure until a new governor is sworn in next year, since the governor appoints members of the bond commission, and whether it was legal for PortSL to pay a deposit to Host prior to receiving permission for a bond sale.

The timeline for bringing the measure back to the bond commission is unclear, but PortSL Director of Communications Micah Cormier said the application has now been moved to “inactive status pending further notice.”

“Host and PortSL continue to discuss any possible amendments or extensions,” Cormier said.

In announcing the move to delay the bond application, Matthews reiterated his faith in the site and the deal for PortSL to buy it from Host.

“With the full cooperation of the seller, Host, we believe the delay is warranted to thoroughly consider points raised by the State Bond Commission and to give members time to analyze the modified agreement the port reached with Host in late August,” Matthews said. “We believe this acquisition will further enhance our profile and allow Louisiana to compete with ports along the Gulf Coast and around the world.

“However, we recognize the significance of this transaction and plan to evaluate this sale in light of questions brought by bond commission members,” Matthews added. “Given that the viability of this acquisition under the modified agreement needs to be carefully vetted, we have decided to delay the consideration of our State Bond Commission application.”