Submitted by Suanne Z. Thamm
Reporter – News Analyst
November 30, 2017 – 12:47 p.m.
The Ocean Highway and Port Authority (OHPA) held a Special Meeting on November 29, 2017 to resolve outstanding financial issues as a precondition for the sale of Nassau Terminals, LLC to Worldwide Terminals Fernandina, LLC. After board discussion and lengthy explanation by board attorney Clyde Davis, OHPA Commissioners unanimously approved Resolution 2017-10, which authorized the pledge of the “operating contract” between OHPA and Nassau Terminals as additional collateral and security to the lender BBVA/Compass Bank for purposes of restructuring OHPA debt, including bond debt.
Worldwide Terminals Fernandina, LLC, seeks to acquire 100 percent of the membership units held in Nassau Terminals, LLC. To do so, it has obtained a commitment for financing from BBVA/Compass Bank to pay off all of the remaining $38.5M bond debt due under a Trust Indenture dated December 1, 1990. According to Davis, OHPA debt today is $9.9M, with $6.6M left in the bond. Cancellation of this debt removes the liens from Port of Fernandina property.
As a result of this action, the “operating agreement” may be pledged, encumbered or conditionally assigned to BBVA/Compass Bank by Worldwide Terminals Fernandina, LLC as collateral and security provided in connection with its acquisition of Nassau Terminals. It is important to note, however, that the “operating agreement” with Nassau Terminals remains unchanged, unless OHPA and the new owner opt to modify it.
Davis explained that the Resolution is only a preliminary step to the sale of Nassau Terminals, LLC. He stressed that OHPA’s contract for port operations is with Nassau Terminals, not the parent company, Kinder Morgan. But that OHPA, Kinder Morgan and Worldwide Terminals must all agree to reassign the contract to the new owner.
When asked to explain why this is a good move for OHPA, Davis cited several reasons. The new owner will assume the long-term debt. The Port of Fernandina will be Worldwide Terminals’ only port in Florida. Davis characterized the new owner as having a leaner operation that can focus on Fernandina’s port. By eliminating the layers of bureaucracy from a large company such as Kinder Morgan, the port operation will be able to act and react more quickly. Kinder Morgan, because of its size, could afford inefficiencies, whereas a smaller, focused port operator can react quickly and nimbly to changing circumstances.
Davis added that the new owner, through its financial structure and stability, will bring added security to the port operation. The company has committed to an onsite presence at the Port, as well as to keeping and hopefully expanding the number of jobs at the Port.
In what seemed like a contradiction, Davis said that the operating agreement itself “would not change, but it will have to change.” Since the bond covenants will go away, there is no need for a bond trustee. Various mandatory changes in Florida law need to be added. Nassau Terminals must maintain public records. And the length of the contract needs to be extended beyond the remaining 5-year limit to allow Worldwide Terminals Fernandina time to amortize the additional debt. Davis said that OHPA’s cash flow would improve with the sale.
Davis said that if Port performance were to continue in the downward trend reflected in the last 4 years, it would guarantee failure for the Port.
District 2 Commissioner Danny Fullwood asked why Worldwide Terminals thought it could do better than Kinder Morgan. Davis cited the significant assets of the Port of Fernandina, including the deepest natural port south of Virginia, which is only 2 miles from open ocean, as well as the close-in railroad and interstate connections. He expressed his belief that the new company will be able to react more quickly to marketing opportunities than Kinder Morgan.
Davis said that he has emphasized to the new owner the need for community involvement in various ways.
Christopher T. Ragucci, President and CEO of Worldwide Group (http://worldwidegrp.net), was present during the meeting, but did not speak. He indicated to this reporter that he expects to finalize the purchase of Nassau Terminals mid-December and would hold a press conference following the official sale.
Clyde Davis announced that Ragucci would be moving to Nassau County following the sale.
Editor’s Note: Suanne Z. Thamm is a native of Chautauqua County, NY, who moved to Fernandina Beach from Alexandria,VA, in 1994. As a long time city resident and city watcher, she provides interesting insight into the many issues that impact our city. We are grateful for Suanne’s many contributions to the Fernandina Observer.