Bank loans secured for KCT port expansion
Published:Wednesday | September 28, 2016 | 12:00 AMSteven Jackson
French shipping company CMA CGM announced that its consortium secured financing equivalent to the funds required for phase-one upgrade of the Kingston Container Terminal (KCT).
The concession holder will pay a final tranche of funds to Port Authority of Jamaica, US$24 million, related to the handover of the port, within six months.
"In order to develop the terminal facilities and operations, the company has obtained from certain banks an undrawn financing amounting to US$265 million, maturing in June 2031 and bearing variable interest during the construction period (with no principal repayment during this phase) and fixed interest after the construction period," said the shipping company's financial reports for the second quarter ending June 2016.
It builds on financing from the Inter-Development Bank, which last year announced a senior secured loan of up to US$175 million for the port project. The development bank said at the time it was the largest non-sovereign guaranteed transaction ever done for a project in Jamaica. The 30-year KCT concession won by CMA CGM and Terminal Link is held through a company called Kingston Freeport Terminal Limited.
The bank loans will help finance the deepening of the navigation channel, reinforcing part of the existing quay and the procurement of new equipment to expand the terminal capacity from 2.8 million to 3.2 million TEUs, or twenty-foot equivalent container units.
Kingston Freeport plans to develop KCT as a strategic hub to take advantage of the widened Panama Canal, which can now transit super cargo ships.
The handover of the terminal's operations from PAJ to the company occurred on June 30 of this year, "triggering the transfer of certain assets and liabilities against a payment of US$75 million, US$24 million of which remaining to be paid in three to six months from handover date," stated the company in its financials.
The major assets transferred to Kingston Freeport include terminal equipment valued at US$94 million, cranes at US$50 million and straddle carriers at US$20 million, empty container handlers at US$2.5 million, and various other equipment worth US$23.5 million.
The concessionaire is expected to invest approximately US$509 million over two phases of the concession with the possibility of a third negotiable phase.
Phase one of the port expansion, at US$259 million, includes capital dredging to a draught of 14.2 metres to be completed within five years, and strengthening of the existing quay walls to accommodate the larger vessels and equipment. This aims to increase capacity to 3.2 million TEUs.
Phase two involves a US$250 million plan for further dredging to a draught of 15.5 metres and to grow capacity to 3.6 million TEUs.
Phase three, which is contingent on a future agreement, involves the development of a new deep-water berth with a draught of 15.5 metres.
The concessionaire will pay a fixed US$15 million per year as lease for the port, and a variable fee of eight per cent of gross revenues to the Port Authority.