A proposed deal to privatize the Port of Galveston fell through.
Hutchison Port Holdings and the Carlyle Group formally withdrew their proposal to acquire the terminals at the Port of Galveston, according to BMO Capital Markets, which has been advising the Texas port on efforts to seek private investment.
In addition, BMO, a subsidiary of the Bank of Montreal, told the port that Hutchison Port Holdings has withdrawn from the joint venture with The Carlyle Group. The Port was not given the reason for the withdrawal.
The port and BMO have been working together for more than a year to attract a private operator to invest as much as $500 million in its breakbulk, dry bulk and roll-on, roll-off facilities and to build a two-berth container terminal on the port's west end.
Hutchison Port Holdings and the Carlyle Group had made the formal proposal to take over the facilities on Feb. 14. They were seeking a 75-year lease that would give them control of the 100-acre container terminal planned for the west end of the port's Galveston property, as well as existing leased assets, and the port's two cruise terminals and associated assets.
The purchase of the cruise terminals was not part of the original bid request and was put on the table at the request of Hutchison Port Holdings.
In exchange, the port would see about $60 million in debt paid off by the investors, would receive cash up front and the release of port funds, annual expense payments, and a share of profits from cruise and freight revenues.
"The Hutchison Port Holdings and Carlyle Group joint venture was viewed as a unique opportunity for overall business growth for the Galveston Bay region and the Port was surprised to learn that the proposal was withdrawn so suddenly," the port said Thursday following the collapse of the proposed deal.
The port had been preparing to start negotiations to finalize an agreement when it learned that the proposal had been withdrawn.
BMO Capital Markets has been in contact with several other potential investors that had expressed interest in the possibility of establishing a public private partnership, which could result in Galveston becoming the first U.S. cargo port that operates its own facilities to become completely privatized.
BMO Capital Markets told the Port of Galveston that it expects these contacts "will result in one or more alternatives for the Board of Trustees of the Galveston Wharves to consider in moving forward."
BMO Capital Markets has already has been in contact with several entities that had indicated their initial interest to examine this public private partnership opportunity. Based on these conversations, it is anticipated that this will result in one or more alternatives for the Board of Trustees of the Galveston Wharves to consider in moving forward.