“Normal process …”
From Canada comes the word that the Ontario Teachers Pension Fund is warning that it may abandon its proposed takeover of a major New York marine terminal because of a fee dispute with the local port authority.
The Port Authority of New York and New Jersey is demanding a payment of $ 45.7 million from Orient Overseas (International) Ltd. before it agrees to transfer the lease on its New York Container Terminal (NYCT) at Howland Hook on Staten Island to the Toronto-based pension fund. As early as this past autumn, the Teachers Pension Fund had agreed to pay Orient Overseas $ 2.4 billion for four terminals, including the one on Staten Island.
Deborah Allan, a spokeswoman for the $ 100 billion pension fund, said that Orient Overseas believes the size of the fee to transfer the lease is ‘unacceptable’. “If the Port Authority is unrealistic, the sale will fold”, she cautioned.
“We agree with Orient that the Port Authority is changing the rules after the fact,” Ms. Allan stated. Although the initial agreement took place last fall, it wasn’t until this past February, during its negotiations with AIG Global Investment Group, that the Port Authority began to ask for this type of payment. “This is a dangerous precedent,” she added.
Debra Hanna, also speaking for the teachers fund, announced, however, that, “We’re still in discussions with the port authority. Everything is going through the ‘normal process’”.
Jim Devine, CEO of NYCT, is also on record as stating that the port authority is asking too much money from Orient Overseas. Mr. Devine said that a counter offer of $ 22 million by Orient Overseas has been rejected by the port. “They don’t want to negotiate, they want to dictate,” Mr. Devine complained.
Sales of the other three terminals to the Teachers Pension Fund, it should be noted, have been completed. Global Terminal in New York … which was privately owned and did not require port authority approval … and two terminals in Vancouver, British Columbia, have already passed into the hands of the teachers fund. The port authority’s consent and ‘normal process’ is the only thing holding up the sale of Howland Hook.
So what else is new? Well, the AIG Global Investment Group ran into the same problem several months ago when it was dealing with Dubai-based DP World for control of the Port Newark Container Terminal. Remember that? After ‘normal process’, AIG eventually reduced the $ 84 million ‘concession’ fee demanded by the port authority to $ 50 million.
Germany’s Deutsche Bank is currently negotiating to acquire the region’s largest terminal operation, Maher Terminals in Elizabeth, NJ, from the Maher family. Because the port authority will have the final say, however, how much do you suppose ‘normal process’ will cost Deutsch Bank?