By Michael Dunning

US ports are an attractive asset for infrastructure investors particularly because they are linked to GDP growth. It’s therefore not surprising that during the height of the rush to acquire infrastructure assets in 2006-07, they were at the top of many shopping lists. That led to a number of major US ports changing ownership. But nearly all of those deals ran into difficulties. The reasons why are many and varied. The financial crisis and subsequent global recession played their parts. But the ports sector is distinct from the rest of the infrastructure asset class and there are other, more specific reasons why deals ran into difficulties.

The four major acquisitions in 2006-07 that subsequently had to be restructured were Ontario Teachers’ Pension Plan’s (OTPP) USD2.35bn acquisition of Orient Overseas International’s (OOIL) North American terminals; Highstar’s USD1.3bn acquisition of Ports America; RREEF’s USD2.4bn acquisition of Maher Terminals and; Goldman Sachs Infrastructure Partners’ (GSIP) circa USD3bn investment for a 49% stake in Carrix.

Exact details of what fixes have been employed in each of those deals are sketchy – owing to their opacity. However, the consensus in the US infrastructure market is that they have all received additional equity investments and have all had their bank debt restructured in some form.

Restructuring and Additional Equity
The OOIL deal is said to have fared the least badly but still had to be restructured last summer, according to market sources. OTPP is also said to have put additional equity into the deal. Market estimates are that the figure is around USD300m with some claiming it was as much as USD600m. In addition, it is believed that a further injection of equity is possible but this would be contingent on business performance.

There is also agreement in the market that Highstar’s Ports America deal was restructured – the fund manager is thought to have injected additional equity into the asset on more than one occasion.

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