After years of financial turmoil, the Port of Wilmington operator on Monday created a new management team made up of two corporate restructuring experts and a former member of Governor John Carney’s cabinet.
The state of the port today contrasts sharply with Emirati port operator Gulftainer’s vision before resuming operations in 2018. Then Gulftainer officials said they could turn the Port of Wilmington into one of largest gateways on the east coast and potentially double the number. jobs at the port.
Four years later, the port operator owes Delaware at least $3 million, a promised new facility has yet to be built, and the state still subsidizes some port operations.
Why did Delaware privatize the Port of Wilmington?
Carney in September 2018 said the Port of Wilmington privatization deal would secure and expand the state’s 5,700 port and shipping jobs and end the loss of “blue-collar jobs” in the state. The State of Delaware had operated the port with an annual loss of $10 million in previous years.
Delaware was “out of order to subsidize the port,” Carney said.
Who is Gulftainer?
Gulftainer is an independent private port operator based in the United Arab Emirates.
Founded in 1976, it operates two US ports: the Port of Wilmington and Port Canaveral in Florida. It also has ports in Iraq, Saudi Arabia and the United Arab Emirates.
Gulftainer is the parent company of GT USA Wilmington, which operates the port.
What was in the deal with Gulftainer?
The state and Gulftainer negotiated a 50-year lease starting in 2018.
Among the terms set in a 150-page agreement between Delaware and Gulftainer subsidiary GT USA Wilmington are that “there shall be no ongoing financial commitment” from Delaware; that the port will never be used as a liquefied natural gas terminal; and for GT USA to invest $585 million in infrastructure at the Port of Wilmington, primarily for the construction of a massive new container terminal. The terminal is supposed to be built at Edgemoora former DuPont chemical site north of Wilmington along the Delaware River.
GT USA must pay Delaware at least $3 million each year to operate the port.
What is moving in the port? What is his size ?
When the state privatized the port, it was transporting about 7 million tons of cargo each year, about a quarter of which were bananas and plantains. The port’s throughput was slightly higher than its South Jersey competitors, but lower than the Port of Philadelphia.
When did the port operator start struggling?
In late August 2021, Gulftainer executive Peter Richards told employees: “We’ve actually been running a port for three years now, running a port for three years and losing money all the time.”
His comments followed more than a year of unrest at the port, with the departure of key financial executives, lawsuits, threats of work stoppages over delayed paychecks and claims by a senator of the State of Delaware that “all on-site contractors” were unpaid.
Does Delaware still subsidize the port?
The state has committed multiple recent grants.
The bond bill included a $5 million appropriation for “port terminal ease of access and training.”
The Diamond State Port Corporation, a state-owned entity that ran the port before it was privatized in 2018 and now oversees GT USA Wilmington operations, committed nearly $3 million in April to pay the costs of a settlement that resolved a dispute between GT USA Wilmington and a health insurance fund union.
Company officials also approved what could become an additional $20 million for expenses related to obtaining and defending building permits for the Edgemoor container terminal.
Earlier this year, GT USA Wilmington failed to make its first quarter lease payment to the state — an overdue amount to taxpayers that totals at least $750,000. He has not made any subsequent payments to Delaware since, Secretary of State Jeffrey Bullock said last month.
State Rep. Debra Heffernan, in a letter to Carney and Bullock on Monday, said GT USA hadn’t made a lease payment in more than a year — indicating an overdue amount for taxpayers to at least $3 million. Heffernan said that despite the “breach of contract”, Delaware has continued “to contribute financially to the port in a way that appears to conflict with the terms of the original lease agreement.”
Who else does GT USA Wilmington owe money to?
As state officials negotiated the lease with Gulftainer in early 2018, they pressured Gulftainer and Murphy Marine Services — a local shiploading company already doing business in the port — to combine operations, according to court documents.
The companies agreed to combine their businesses, but could not agree on a price Gulftainer subsidiary GT USA Wilmington would have to pay to take over the smaller Murphy Marine.
Murphy Marine wanted about $26 million, but Gulftainer officials considered the company far less valuable. The dispute landed in the Chancery Court where a judge ruled last month that GT USA Wilmington must pay Murphy Marine Services more than $28 million – a payment of $21.5 million plus interest.
Why did GT USA Wilmington form a new management team?
GT USA Wilmington created a new management team with a board now made up of two corporate restructuring experts and a former member of Carney’s cabinet. No member of the Gulftainer team that sold its privatization bid to Delaware officials in 2018 is on the board.
GT USA Wilmington said in a statement Wednesday that it has reconfigured its board of directors as part of “the port’s continued development.”
Asked about the new board on Tuesday, Secretary of State Jeff Bullock said GT USA’s creditors – to whom it owes $100 million – “have exercised their ability, under a loan agreement, to appoint an independent board of directors with the aim of increasing growth” at the port. of Wilmington.
The board restructuring came less than a month after a judge ordered GT USA Wilmington to pay more than $28 million to a shiploading company that previously operated in the port.
The new board includes Tim Pohl and Michael Sullivan — each of the corporate restructuring consultants — and Mike Jackson, who served as director of the Delaware Office of Management and Budget between 2017 and 2020.