The State of Virginia will no longer consider three unsolicited bids from private investors who are seeking to lease its array of container terminals in Hampton Roads, Virginia Secretary of Transportation Sean T. Connaughton announced Friday.
Though the process of reviewing the unsolicited bids is ending, Connaughton said the state will undertake an evaluation of the Virginia Port Authority and Virginia International Terminals to determine the advantages of privatizing all or part of their operations in the future. This evaluation will be undertaken during the next year.
The three unsolicited bids for the state-owned and operated terminals came from companies seeking a long-term operating concession at the state-owned terminals. The bidding contest was touched off by an unsolicited $2.2 billion offer by CenterPoint Properties Trust of Illinois in March 2009 to operate the VPA's three existing marine terminals and the inland terminal at Front Royal in partnership with the VPA and another $1.3 billion investment in the planned Craney Island Terminal when it is ready.
Later in 2009, two more bidders entered the contest, the Carlyle Group, based in Washington, D.C., and the partnership of Carrix and Goldman Sachs.
The VPA said the decision to terminate the process of evaluating the three bids was reached for two overriding reasons: 1) the proposals were received during a significant economic downturn that impacted the value of the Virginia Port Authority's (VPA) assets, and 2) the increase in asset value that came as a result of the VPA entering into a long-term lease of the APM Terminals in Portsmouth.
"We are mindful that the three proposals were received during a severe economic downturn that reduced the volume of cargo moving through the Port, with consequential negative impacts on the Port's revenues and value," Secretary Connaughton said. "Since that time, however, cargo volumes moving through the Port have steadily increased. The bids, therefore, are not considered reflective of the value of the terminals based on the past investment made by the Commonwealth and their anticipated value as the economy recovers."
In addition, Connaughton said there was a significant change in value of the port given the 20-year lease the VPA recently executed for APM Terminals in Portsmouth. Having operational control at that facility dramatically increases the efficiency and cargo handling capabilities of the Port on multiple levels and therefore increases the collective value of the VPA's terminals.
"Leasing APM Terminals will make the VPA overall operations more efficient, allow for the Portsmouth Marine Terminal to be put to other uses and alter the development schedule for Craney Island," Connaughton said. "It will take time for APMT to be completely integrated into VPA's operations as well as determine its long-term impacts on the VPA, its plans, and finances. None of the bids could take into consideration this enhancement to the VPA portfolio of assets."
Jerry Bridges, executive director of the VPA, said the outside interest in the Port indicates that Virginia is seen in the larger marketplace as the premiere port complex on the U.S. East Coast.
"You don't garner these kinds of offers by having the reputation of being an average, second-tier facility," Bridges said. "These companies conducted their due diligence and realized the collective assets of this Port are unrivaled on the East Coast."
-- Contact Peter T. Leach at email@example.com.