Global Ports Holding Plc ("GPH"), the world's largest independent cruise port operator, through its wholly-owned subsidiary San Juan Cruise Port LLC ("SJCP"), has achieved financial closing of the PPP Agreement and secured debt financing for the initial phase of its investment in Puerto Rico's San Juan Cruise Port.
This milestone marks the commencement of a significant endeavor to improve the port's infrastructure and bolster San Juan's standing in the Caribbean cruise market.
The financing, totaling US$187 million, has been secured through the issuance of long-term BBB- investment grade rated bonds to the US municipal bond market and North American institutional investors, in addition to equity capital invested by GPH. This substantial private capital infusion into Puerto Rico's cruise industry highlights the project's magnitude.
SJCP has assumed operations and will initiate a multi-million-dollar plan to rehabilitate, reconstruct, and enhance the port's infrastructure in accordance with its PPP Agreement with the Puerto Rico Ports Authority ("PRPA").
San Juan Cruise Port serves as a crucial transit port and homeport, necessitating significant investment in its infrastructure to sustain operations throughout GPH's 30-year concession term and accommodate the evolving needs of the burgeoning cruise industry.
Under the concession agreement, SJCP will pay PRPA an upfront concession fee of US$77 million. During the initial investment phase, approximately US$100 million will be allocated primarily to critical infrastructure repairs at Pier 4 and Pan American Piers, as well as upgrades to terminal buildings and the walkway in front of Old San Juan piers. Additionally, funds will cover transaction expenses, reserve accounts, and other incidental uses.
This initial investment will also focus on modernizing the port experience for cruise passengers, lines, and local vendors, leveraging GPH's global expertise and operational model to enhance port management. Modernization efforts will encompass investments in systems, equipment, and technology to optimize operational performance, ensure environmental protection, safety, and security.
GPH and SJCP are committed to integrating the port into Old San Juan and Puerto Rico's thriving tourism sector, offering substantial opportunities for local businesses to directly benefit from improved facilities and anticipated growth in cruise passenger volumes.
The second investment phase, contingent upon pre-agreed criteria such as cruise passenger volumes recovering to pre-pandemic levels, will see SJCP invest an estimated US$250 million (2023 prices) in expanding San Juan Cruise Port's capacity. This expansion includes constructing a new cruise pier and state-of-the-art homeport terminal at Piers 11 and 12, capable of accommodating the world's largest cruise ships. Financing for this phase is anticipated from the US municipal bond market and North American financial institutions.
The addition of San Juan Cruise Port represents a significant advancement in GPH's strategic objectives in the Caribbean. With 1.8 million unique passengers welcomed in 2019, including approximately 0.4 million homeport passengers, San Juan Cruise Port ranks as the third-largest cruise port in GPH's global network.
Strategically positioned in the Caribbean cruise market, San Juan Cruise Port is poised to be included in Eastern Caribbean and Southern Caribbean itineraries. Puerto Rico's status as a US territory, coupled with its airport and hotel infrastructure, enhances its appeal as a homeport destination for Eastern and Southern Caribbean itineraries.