The Port of South Louisiana will return to the negotiating table over its proposed purchase of the Avondale Global Gateway, a sign that the controversial $445 million price tag for the former shipyard could slip lower based on new financial studies.
In a news release Friday, port officials said Avondale's current owner, T. Parker Host, had agreed to extend a review period until August so that analysts hired by the port could finish their analysis on whether the deal makes financial sense.
"Once the feasibility analysis is complete, we will negotiate final terms of the acquisition, including price," said Port of South Louisiana CEO Paul Matthews. "The additional time Host is providing Port SL allows our experts to complete their work.”
The Port of South Louisiana has agreed to buy the former Avondale Shipyard site from T. Parker Host Inc. for $445 million. Cranes rise above the site, on the West Bank of the Mississippi River, on Jan. 12, 2023.
The purchase of the former shipyard, which was announced in January, was quickly met with criticism from some politicians and industry officials over the price and lack of transparency.
The deal had been negotiated directly between officials from the state-owned Port of South Louisiana and privately-owned Host without consultation with any other port industry officials, including Port of New Orleans officials in whose jurisdiction Avondale is located.
Public records requests later revealed the basis of the price, which was the lower of two appraisals conducted by real estate valuation firms.
Avondale, the once-booming shipyard that was shuttered in 2014 after more than 60 years as a shipbuilder for the U.S. Navy and offshore oil industry, was bought by Host in 2018 for $60 million. The company said it subsequently invested $90 million to rehabilitate the 275-acre site and bring it back into commerce as a port. The pace of the project was slowed by hurricanes and the coronavirus pandemic, and Host has yet to secure an anchor tenant at the site.
Paul Matthews, the Port of South Louisiana's executive director, says the port's proposed $445 million purchase of Avondale Global Gateway helps form a region-wide strategy to maximize use of the state's waterways for industrial development.
For the deal to proceed, the port will require approval from the Bond Commission to issue state-sanctioned bonds. That process requires that they hire independent consulting firms to conduct feasibility, engineering and environmental studies.
The port said in May that it had hired Pennsylvania-based industry consultant Martin & Associates to conduct the feasibility study. Other firms have been retained for environmental and engineering studies.
"The property was placed under contract at an appraised value," the port said in the news release. "The final price will be negotiated based upon the results of the feasibility analysis."
The feasibility study had not been submitted by Friday, according to a spokesperson for the Bond Commission.
Another extension
This is the fourth time that the port and Host have extended the due diligence period.
Matthews, who took over the top job at the port in 2022, said Friday that his goal was to make sure that the final price was fair.
"We are taking our time to analyze every aspect of this potential acquisition," he said. "We will ensure the state of Louisiana gets the best deal possible."
Host CEO Adam Anderson said in the port news release that the company would work with the port to complete the deal.
It is not clear if the delays in closing the deal, which initially was supposed to be completed before the summer, will result in any financial penalties for the port.