Posted on March 27, 2023
Paul Matthews, CEO of the Port of South Louisiana, sat down with Biz New Orleans this week to provide an update on the port’s plan to purchase the Avondale Global Gateway for $445 million from Virginia-based maritime company T. Parker Host.
The facility is the site of the former Avondale Shipyard, which at one time was the state’s biggest employer before shutting down permanently in 2014. Host bought it in 2018 and brought it back into commerce as a logistics hub and with the hope that it also will eventually house multiple tenants looking to take advantage of access to the Mississippi river, rail and other transportation options.
PortSL’s purchase plan, which was announced in January, caught many off guard.
Some critics said the price is too high, the property needs too much work and PortSL shouldn’t be doing deals in what is technically the jurisdiction of the Port of New Orleans. Matthews himself has been a target of critics. A recent story in the daily paper said he has a “mixed record” from his time on the staff at the Plaquemines Port Harbor & Terminal District that includes a “lack of transparency, controversial contracts and suspect appraisals.”
Despite the pushback, the deal has been blessed by the Jefferson Parish Council, the Jefferson Business Council and others who view it as a major economic development win for the parish.
In a series of Q&As, Matthews talks about how the deal came together, the next steps in the process and his thoughts about the critics.
Biz: How’s the deal going?
Paul Matthews: It’s going fine. We have a team that’s focused on the infrastructure assessment — checking the warehouses, the cranes and the docks. We did tours of the facilities. We have our bond council working with the bond commission staff and the underwriters, which are Wells Fargo and Piper Sandler. And they’re just going through the due diligence of the numbers. We’re just figuring out the math and making sure that we have all things in place so that when we go to the bond commission, everything’s laid out.
We’ve had great discussions with the bond commission, those elected leaders. We’ve always said if the math works, we’re moving forward, and if the math doesn’t work, we move on. We’re just making sure that all the experts that we have — from the underwriters to the bond council to our environmental assessment team and our infrastructure team — are going to come to us and say, ‘This is how you need to move forward.’ … Or not, right? One way or the other. And so that process is ongoing.
What’s the time frame?
We anticipate closing on the project hopefully by the end of the summer. We’re letting the process dictate when that is, and that’s kind of aggressive, but we feel that’s a good time frame. I mean, the concept of this is pretty aggressive in itself.
I think some media or critics had the idea that the deal was already done when we put it out there that we’re going to do this. … We were actually trying to be transparent to let everybody know we were going through this due diligence process to get to this point by the end of the summer.
What remains to happen for this to become official?
The bond commission staff and our underwriters are all looking at the revenues that are generated at the facility right now. And those numbers are going to determine what the bond commission is going to approve. At this time, we believe that the revenue currently generated on the property will pay for the debt service of the bonds. We’ve got to go through that process, and if the bonds pay for the full price, then we’ll go straight to closing. Or we may have some other financial arrangements, working with the seller to fill in the gap.
What about the Gov. Edwards? It seems like everyone is waiting to see what he says about this.
The governor has been stand up with us since day one. First, I had to talk to my board, take them through the process. And they agreed. They agreed so much that they couldn’t wait to vote on this thing. They were so aggressive and wanting to get a vote on this, it actually sped up our timeline for communication. So we were on the phone with the state legislators and council members that represent Jefferson Parish to let them know this announcement was coming. And we [asked] for a meeting with the governor and the governor was excellent. He got us a meeting with him within 24 hours, something like that, because of the serious nature. And he said, ‘Okay, explain to me what you guys are trying to do. It’s my first time hearing about it.’ We said we understood that, and we explained it to him. And he said, ‘Okay, well, get with the Department of Transportation and with Louisiana Economic Development. Give them all the information, let them review it and they’ll provide me a better understanding.’ … And that’s what we did.
And when we read the Times Picayune, the article said that everybody was left in the dark, but the governor was saying the same thing in the article that he told us: ‘We as a state need to review it more and get a better understanding working with LED and the DOTD.’
So that meeting had happened before the announcement?
We made a point not to do a press release until after we talked to the governor. We met the day before.
Was there a nondisclosure agreement with Host that prevented you from talking about this in advance?
Yes. It’s a private company. It’s a business deal. And that’s kind of my point when people say, ‘Well, people didn’t know about your confidential negotiations.’ My answer is, ‘Duh …” We’re a port that leases property and buys stuff all the time. And we have to do confidential processes all the time, because we’re competing against the Houstons and Floridas and Californias. So we have to be confidential. Plus, the private companies don’t want things to get out until the right time.
And it’s important to note there was no for sale sign out in front [of Avondale]. We reached out to them about doing this.
What is the vision for this? What do you hope to do with this property?
First and foremost, having available public docks on the West Bank for our customers in the River Region is number one. That’s why we went after the deal. We have customers in the River Region that are moving cargo to Houston to ship it out, even though they’re operating in the state of Louisiana. … We don’t have public docks on the West Bank available, and it will take us three or four years even longer to make those available for our customers.
The former Avondale Shipyard is now the Avondale Global Gateway.
Also, Host knows terminal operation and we know how to be the owner and landlord. If we do this deal, we can go after federal funding through grants which they can’t go after themselves to try to find ways to expand the facility.
We’re also very much interested in the renewable energy piece. That’s one of our three pillars outside of agriculture and infrastructure. And [Avondale] is particularly focused on wind. We also see food processing as an opportunity and advanced manufacturing, all within that 254-acre space. There’s opportunities for expansion of rail on the West Bank.
So much of the East Bank of the region is developed. We know that. So where are we going to have the land to attract customers and still have the infrastructure necessary? And it’s the West Bank, which has Union Pacific access and land available.
To expand the rail, do you need the Port of New Orleans to help you secure that, or is that something you can control yourself?
Working with Union Pacific on the West Bank is where we have our focus. But we want to work with the Port of New Orleans and New Orleans Public Belt because we see it as an opportunity to have Avondale connected to the region’s six Class I railroads. And that can benefit both sides
And is the only way to do that is with the Public Belt?
I see it as we’re just working together to expand what cargo can go down there. Yeah. So we’re gonna work together. We have to.
What is the relationship like with the Port of New Orleans? You’re coming into their jurisdiction and obviously it has to benefit everybody for it to work. What is the relationship now? How do they feel about this?
We’ve had a good relationship. Brandy [Christian, Port NOLA CEO] and I have exchanged emails back and forth. They looked at potentially acquiring the property four or five years ago. So I reached out to them to say, ‘Hey, do you have any documentation to show me what you guys looked into that can help us expedite our process.’ And Brandy was on it. She immediately sent us some information. I reached out to her to let her know about it right before it hit the press, and she said, ‘I look forward to the mutual success of working together.’ So we’ve both been positive.
The Port of New Orleans is where I cut my teeth. So I want the best for New Orleans. I want the best for every port in the state. And the Port of South Louisiana does as well.
