KCT concession financial closure pushed back to March
Financial closure of the US$510-million (J$61-billion) concession agreement with French company Kingston Freeport Terminal for the operation of the Kingston Container Terminal (KCT), which was expected by December last year, is now anticipated during the first quarter of 2016.
The Port Authority of Jamaica said that because of the "exhaustive nature of the due diligence by potential financiers, credit committee and board approval was delayed relative to the original dates contemplated".
The board of the Inter-American Development Bank (IDB) - the A lender - approved the credit application of the concessionaire, Kingston Freeport, and its sponsors on December 16, 2015, the Port Authority said in response to Financial Gleaner queries.
"However, financial closure is not expected before the first quarter of 2016. During this period, final approval by B lenders is expected and loan documentation will be completed," Port Authority said.
IDB is the main financier to the concessionaire with a group of commercial banks - the B lenders - rounding out the financing being sought.
Kingston Freeport is the vehicle being used by the Terminal Link-CMA CGM consortium to operate the port under a deal signed with the Port Authority in April 2015 to finance, expand, operate and maintain KCT. The port is to be transferred back to the Jamaican Government at the end of the 30-year concession period.
In December 2015, the IDB approved what it said then was its largest single non-sovereign guaranteed transaction in Jamaica with a senior secured loan of up to US$175 million for Kingston Freeport Terminal to finance the optimisation and expansion of Kingston's container terminal capacity in Jamaica.
Upgrade to increase competitiveness
The IDB loan will help finance the deepening of the navigation channel from 13.5 to 14.2 metres, reinforcing part of the existing quay and acquiring new equipment to expand the terminal capacity from 2.8 million to 3.2 million TEU or twenty-foot equivalent container units per year.
The development bank said the upgrades will increase the port's competitiveness, enabling it to handle growing volumes from Asia, North America and Europe.
"The project will increase the port's capacity, and its modernisation will enable it to handle larger container ships and move more cargo," a release quoted Jean-Marc Aboussouan, chief of the Infrastructure Division in the IDB's Structured and Corporate Finance Department, as saying.
"The improvements will increase Kingston terminal's competitiveness and its ability to handle the expected growing volume of trade once the expansion of the Panama Canal is finalised," added Aboussouan.
The investments will be implemented under the 30-year concession to CMA CGM, the third-largest container shipping company in the world, and CMA Terminals Holding, a large worldwide port operator. The contract provides for management of the improvements and operation and maintenance of the container terminal.