VPA board votes to stay with VIT
The Virginia Port Authority Board of Commissioners voted Tuesday to drop all private bids for port operations in favor of its current operator, Virginia International Terminals (VIT).
The board voted to dismiss private bids for the port and to reorganize VPA and VIT, according to the Virginia Port Authority.
“We are transforming The Port of Virginia to meet a changing and increasingly competitive environment,” William Fralin, chairman of the VPA board, said in a statement. “We will move forward as a stronger, leaner organization that is better-positioned to serve the ocean carriers and port customers, attract cargo to Virginia and be more accountable to Virginia taxpayers.”
The process started last spring when APM Terminals filed an unsolicited proposal under Virginia’s Public-Private Transportation Act to run the Port of Virginia operations. Under the proposal, worth about $4 billion, APM would have run port operations for 48 years.
The proposal was especially interesting because the authority currently operates APM Terminals’ $540 million marine terminal in Portsmouth – the most technologically advanced in North America – under a 20-year lease agreement signed in 2010.
Two other private bidders had submitted competing bids last summer: Deutsche Bank affiliate RREEF America LLC and private equity giant The Carlyle Group, which later withdrew its proposal.
The RREEF America proposal had become Virginia Port Partners LLC, which included JPMorgan IIF Acquisitions LLC and Maher Terminals LLC, a terminal operator in New Jersey.
Virginia International Terminals submitted its own bid.
The proposals sparked fierce opposition from many in the maritime community and debates over the port’s finances. One study had deemed the port’s current operations as financially unsustainable, but a report by the General Assembly’s Joint Legislative Audit and Review Commission found that the port’s finances were more positive.
“We were pleased with the decision of the board,” said Art Moye, executive vice president of the Virginia Maritime Association, which had opposed the privatization proposals, “pleased to see it was unanimous. We’re relieved that this process has finally come to a conclusion.”
Gov. Bob McDonnell withheld his opinion on the board’s decision on Tuesday. “In the coming days, the Secretary of Transportation and I intend to review the letter and materials sent to me by VPA Chairman [William] Fralin regarding the board’s action. After that review is completed, I will issue a statement regarding my position on the board’s actions,” McDonnell said in a statement.
APM Terminals came out with a statement saying it was disappointed in the decision but did not elaborate further.
Moye said the bids did highlight the Port of Virginia’s potential: “With the likes of APM and JPMorgan, for them to have an obvious business interest that they have taken and the proposals they have submitted and the time, effort and money they have attributed to this process, indicates the level of interest and the future benefits that could be drived from this port’s operations. I think it spoke well of this port’s potential that we have been preaching for a long time. The Port of Virignia has the greatest potential on the East Coast, and we think the efforts on this bid process indicated just that.”