Global Ports Regulatory News (GPH)

Global Ports Holding Plc

Signs 30-year concession agreement for San Juan Cruise Port, Puerto Rico

Global Ports Holding Plc ("GPH" or "Group"), the world's largest independent cruise port operator, is pleased to announce that it has signed a 30-year concession agreement with the Puerto Rico Ports Authority for San Cruise Port, Puerto Rico, following a competitive procurement process managed by the Puerto Rico Public-Private Partnership Authority.

This agreement marks a significant development in GPH's strategic ambitions in the Caribbean. On completion, San Juan Cruise Port, which welcomed 1.8m unique passengers in 2019 (including c. 0.4m homeport passengers, i.e. 2.2m passenger movements), will become 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, which means it is an attractive homeport destination for Eastern and Southern Caribbean itineraries.

Port investment

San Juan Cruise Port is currently a popular transit port and homeport. However, its cruise port infrastructure needs significant investment to ensure continued operations over the term of the concession and to meet the needs of the modern and fast-growing cruise industry.

Under the concession agreement terms, GPH will pay an upfront concession fee of $75m to the Puerto Rico Ports Authority. During an initial investment phase, GPH will spend approximately $100m, primarily focused on critical infrastructure repairs at Piers 1 and 4 and Pan American Piers, and upgrades of the terminal buildings and the walkway.

The second investment phase will commence subject to certain pre-agreed criteria, including cruise passenger volumes recovering to pre-pandemic levels. In this phase, GPH will invest an estimated $250m in expanding the capacity of the cruise port by building a completely new cruise pier and state-of-the-art homeport terminal capable of handling the world's largest cruise ships at Piers 11 and 12.

Improved experience

As well as investing in the port's infrastructure, GPH will invest in modernising the cruise port experience for cruise passengers, cruise lines and local vendors and will use its global expertise and operating model to improve the management of the cruise port operations. GPH will also invest in systems, equipment, and technology to enhance the cruise port's operational performance and ensure environmental protection, safety, and security.

The management approach of GPH will ensure the port is integrated into Old San Juan and Puerto Rico's thriving tourism sector as a whole, creating significant opportunities for local businesses to benefit directly from the improved facilities and the expected growth in cruise passenger volumes.

In addition, GPH's destination marketing team will work with the port management team and local stakeholders to ensure that cruise lines and passengers can enjoy the many unique attractions Puerto Rico offers.

Financing & closure

For the long-term project financing of the project, GPH anticipates that the long-term project financing to by way of debt finance from US debt capital markets in the form of non-recourse Project Activity Bonds and/or from US institutional investors. Subject to the satisfaction of the closing conditions, including financing conditions, the concession's financial close and commencement of operations are expected to occur in the second half of GPH's financial year 2023. A further announcement will be made when it is appropriate to do so.

Global Ports Holding Chairman and CEO, Mehmet Kutman, said:

"I am delighted that the Government of Puerto Rico has selected GPH for this public-private partnership to improve and expand San Juan Cruise Port. The addition of this fantastic location to our cruise port network marks a further important step in our growth strategy and will grow cruise passenger volumes across our network to over 16 million passengers per annum.

I welcome San Juan Cruise Port into the world's largest cruise port network. The GPH team looks forward to working in partnership with all stakeholders to refurbish and reinvigorate this leading cruise port to create a world-leading cruise port experience for the benefit of all stakeholders.

Our work to transform this port will see hundreds of millions of US dollars invested into San Juan Cruise Port, all financed by private capital. Our plans include building a new cruise pier, a state-of-the-art cruise terminal, and significant enhancements to the public infrastructure."