Crowley Maritime Corp. is in talks to acquire the Puerto Rico ships, routes and San Juan port facilities of competitor Horizon Lines for about $80 million, according to a report in Caribbean Business.
Caribbean Business said the carrier acquisition talks led by Goldman Sachs began three to four months ago, broke down, and resumed recently after Crowley ran into difficulties with the Puerto Rico Ports Authority over tax credits for a $100 million company investment in port facilities.
The port facilities would handle two container/roll-on, roll-off ships that Crowley has ordered. The new ships will be fueled by liquefied natural gas and will have capacity of 2,400 20-foot-equivalent units of containers and 400 vehicles.
Horizon’s interim CEO, Steve Rubin, could not be reached for comment. Crowley spokesman Mark Miller said by e-mail, “Our plans have not changed. We are building two new, LNG-powered ConRo ships at VT Halter, and we are talking with the Puerto Rico Ports Authority about making improvements to our existing Isla Grande terminal to accommodate those ships when they are delivered and put into service in 2017.”
The new ships will provide a major upgrade of Crowley’s mainland-Puerto Rico service, which now uses roll-on, roll-off trailer barges. Horizon has an older fleet of cellular container ships.
Speculation that Horizon might sell some or all of its Jones Act domestic services has waxed and waned for several years. It spiked recently, fueled by the company’s losses and heavy debt load, and by the resignation last month of CEO Sam Woodward with a year left on his contract.
After a restructuring that helped the company avoid bankruptcy in 2011, Horizon has more than $100 million in debt obligations due in 2014 and 2015, and $600 million due in 2016.
A deal between Crowley and Horizon would change the dynamics of a trade route where a chronically weak Puerto Rico economy and years of vessel overcapacity have combined to yield poor profitability for carriers.
Competition in the Puerto Rico trade is set to stiffen with the introduction of Crowley’s new ships and two 3,100-TEU, LNG-powered container ships that Jones Act carrier TOTE is building for its Sea Star Line. The Sea Star vessels are scheduled to enter service in late 2015 and early 2016.