The Port of South Louisiana has again delayed the closing period for its $445 million deal to buy the former Avondale Shipyard site, after hiring three consulting firms to study the price and viability of the purchase.
The deal was announced by the port's leadership in January, with plans to ask the state Bond Commission in March for approval to borrow money to finance the purchase. The due diligence period to vet the deal was later extended twice, through April. Now the port's leaders say the vetting period is open ended, as they await the consultants' reports.
Paul Matthews, the Port of South Louisiana's executive director, says the port's proposed $445 million purchase of Avondale Global Gateway helps form a region-wide strategy to maximize use of the state's waterways for industrial development.
"The assessments being conducted by a team of experts are an important part of the process and will not be rushed," port CEO Paul Matthews said Thursday. He said there is no timeline for delivery of the reports.
The deal to buy the property, a former shipyard that was once Louisiana's largest employer, was negotiated directly by Matthews with site owner T. Parker Host Inc. in 2022 and then approved by the port's board in January.
On the market
Host bought Avondale in 2018 for $60 million and has said it subsequently invested $90 million to remediate the site's environmental problems and convert some of its docks for use as a bulk shipment port.
The $445 million price was the lower of two appraisals that the port and Host commissioned from real estate evaluation firms. The firm hired by Host put the potential value of the site at $550 million.
The proposed sale price was met with skepticism from some industry executives and port officials, who said it was speculative and based on the theoretical potential of Avondale down the road if it were fully remediated, functional and able to attract permanent tenants.
Questions raised
Host has renamed the 275-acre property Avondale Global Gateway, and said it had revenue last year of $46 million. But that was during an exceptional year for break bulk demand by temporary clients. The site has so far failed to secure any anchor tenants, and it is not clear whether any of Host's clients are permanent tenants.
"These steps are needed to affirm public trust in a project that will benefit everyone," Host CEO Adam Anderson said, referring to the port's extended due diligence process.
Last month, the port said it hired Martin & Associates to determine whether the appraisal price made sense and Avondale could earn enough to pay off the proposed bonds. Port officials said they also engaged WSP and ELOS Environmental to assess remediation requirements.
The Bond Commission also will require that the port produce an engineering survey to assess the cost of upgrading or tearing down some of the dozens of buildings on the vast site, as well as bringing into use additional docks in order to realize the site's potential.
Board decision
After the required reports are submitted, the 14 politicians who make up the Bond Commission will vote on whether to approve financing. They include Gov. John Bel Edwards, state Treasurer John Schroder and Attorney General Jeff Landry. Schroder and Landry are running for governer this year to succeed Edwards, who is term-limited.
Matthews said the port plans to vet the deal thoroughly and could pull out if it proves unviable, although he said he expects it to more forward.
"We are committed to seeing this through and look forward to owning Louisiana’s greatest industrial icon so that we can attract jobs and investment to southeast Louisiana," Matthews said.