Multi-million-dollar financing facilitates immediate handover of cruise port operations to San Juan Cruise Port and paves way for much-needed repairs, reconstruction and upgrades
Global Ports Holding Plc (“GPH”), the world’s largest independent cruise port operator, is pleased to announce that its wholly-owned subsidiary San Juan Cruise Port LLC (“SJCP”) has successfully reached financial closing of the PPP Agreement and simultaneously concluded the debt financing for the initial phase of its investment in San Juan Cruise Port. This achievement marks the beginning of a transformative journey to enhance the infrastructure of the port and elevate San Juan’s position in the Caribbean cruise market.
The financing, totaling USD 187 million, has been secured through the issuance of long-term BBB- investment grade rated bonds, to the US municipal bond market as well as North American institutional investors. Together with equity capital invested by GPH, this project mobilized significant private capital into Puerto Rico’s cruise industry.
SJCP has now taken over operations and will commence its multi-million-dollar plan to repair, rebuild and upgrade the infrastructure of San Juan Cruise Port in accordance with its PPP Agreement with the Puerto Rico Ports Authority (“PRPA”).
Port investment
San Juan Cruise Port is a popular transit port and homeport. However, the significant investment in the port infrastructure is needed to ensure continued operations over GPH’s 30-year concession term and to meet the needs of the modern and fast-growing cruise industry.
Under the terms of the concession agreement, SJCP will pay PRPA an upfront concession fee of USD 77 million. During the initial investment phase, SJCP will invest approximately USD 100 million, primarily focused on critical infrastructure repairs at Pier 4 and Pan American Piers together with upgrades to the terminal buildings and the walkway in front of Old San Juan piers. In addition, the investment includes transaction expenses, reserve accounts customary for a project-financing of this nature and other incidental uses of proceeds.
As part of this initial investment, SCJP will also invest in modernizing the port experience for cruise passengers, cruise lines and local vendors and will use GPH’s global expertise and operating model to improve the management of port operations. This modernization effort will include investments in systems, equipment, and technology to enhance the cruise port’s operational performance and ensure environmental protection, safety, and security.
GPH and SJCP will ensure that the port is integrated into Old San Juan and Puerto Rico’s thriving tourism sector, creating significant opportunities for local businesses to benefit directly from the improved facilities and the anticipated growth in cruise passenger volumes.
The second investment phase will commence subject to certain pre-agreed criteria, including cruise passenger volumes recovering to pre-pandemic levels. In this phase, SJCP will invest an estimated USD 250m (2023 prices) in expanding the capacity of San Juan Cruise Port by building a new cruise pier and state-of-the-art homeport terminal capable of handling the world’s largest cruise ships at Piers 11 and 12. The financing for this second phase is expected to come from the US municipal bond market and North American based financial institutions as well.
Network expansion
The addition of San Juan Cruise Port is a significant development in GPH’s strategic ambitions in the Caribbean. San Juan Cruise Port, which welcomed 1.8m unique passengers in 2019 (including c. 0.4m homeport passengers, representing 2.2m passenger movements), is the third-largest cruise port in GPH’s global network.
San Juan Cruise Port is a strategically important port in the Caribbean cruise market, perfectly positioned to be included in both Eastern Caribbean and Southern Caribbean itineraries. In addition to its airport and hotel infrastructure, Puerto Rico is a US territory, making it an attractive homeport destination for Eastern and Southern Caribbean itineraries.
Global Ports Holding, Chairman & CEO, Mehmet Kutman, said:
“We are delighted to welcome San Juan Cruise Port into the world’s largest cruise port network. As well as being a fantastic destination, San Juan is a strategically important port that is perfectly positioned to play a pivotal role in Eastern and Southern Caribbean itineraries for decades to come.
The successful closing of this transaction represents a milestone for our company and for Puerto Rico. Everyone at GPH is looking forward to us delivering on our plans to bring the iconic San Juan Cruise Port to its rightful, pre-eminent position in the Caribbean cruise industry for the benefit of all Puerto Ricans.”
Global Ports Holding, Americas Regional Director, Mike Maura, Jr., said:
“Our investment into this port will see hundreds of millions of dollars invested into San Juan Cruise Port, transforming the port infrastructure, and significantly improving the cruise port experience for passengers, while creating significant opportunities for local businesses to benefit from the expected growth in cruise passenger volumes.
I would like to thank the Government of Puerto Rico and the Puerto Rico Ports Authority for their support throughout the negotiation process. We look forward to delivering a world-class cruise port that will benefit Puerto Ricans for many years to come.”
San Juan Cruise Port, General Manager, Federico González-Denton said:
“We’re prepared to move forward. We have already established our command center in Old San Juan and hired personnel, 90% of whom are Puerto Rican. Additionally, we’ve onboarded top talent from the PRPA’s Maritime Bureau, ensuring a smooth transition as we assume management of the port.”
