New Yorker Opinion- for Sept issue

Readers know that I am a devout free market guy; my world is all about private companies running ships or shore-side assets in vast supply chains. But, not everyone agrees with me that private is better; many Virginians want to jealously guard what they view as a strategic resource.

As Virginia now begins a round of public hearings, not quite a year after 2008’s financial implosion, a deep distrust of financial buyers is emerging. And, from my vantage point (as an ex-commodity broker and ship financier), I must ask whether now is the best time to be a seller of any maritime related business or asset.

One of three proposals, from the Goldman Sachs/Carrix team, states boldly: “…we do not believe that this is necessarily the optimal time for the Commonwealth to privatise the Port. Given the marquee nature of the VPA’s port facilities, their size and market positioning as one of the top ports in the US, current excess capacity, and the current operating benchmarks that suggest low utilisation, we believe that fully privatising the VPA today would result in a valuation that understates the true potential of the assets.”

Goldman Sachs/Carrix proposes a 30-year deal (which it suggests provides VPA with more flexibility than CenterPoint’s 60-year tenor) following a $250m upfront payment to the VPA, versus $500m proposed by CenterPoint.

Carlyle, the third bidder (with an assist from BMO Capital Markets), has expressed a desire to discuss a 60-year concession, with an upfront payment of between $500m and $700m. Other details must be negotiated.

Depending on various deal parameters, such as profit shares, payments to local communities and the like, estimated net present values (NPV) that could be realised by the Commonwealth range from $2.2bn, up to $3.9bn.

Based on cargo flows projected by Moffatt & Nichol, these are clearly huge numbers but may ultimately not be enough to sway a citizenry in what is certainly a political process.