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Enstructure completes port transfer from Gulftainer

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The Port of Wilmington Enstructure Gulftainer

Enstructure has officially taken over the Port of Wilmington from Gulftainer, and aims to invest tens of millions in upgrades. | DBT PHOTO BY JACOB OWENS

WILMINGTON – The Port of Wilmington officially has a new operator after Boston-based Enstructure completed a transfer with Gulftainer subsidiary GT USA Wilmington on Monday.

Last month, Enstructure was approved by the Diamond State Port Corporation (DSPC) and the state government as the new operator after GT USA Wilmington failed to fulfill the terms of its 50-year concession agreement, including the failure to advance the planned container port at Edgemoor.

Enstructure, the winning bidder over three other firms, owns and operates a network of marine terminals and logistics assets on the East Coast, Gulf Coast and Inland River System of the United States. Founded in 2016, it provides extensive services for some of the world’s largest companies within the energy, agriculture, food, manufacturing, construction and public safety sectors.

“Enstructure is excited to partner with the DSPC and begin operations at the Port of Wilmington, where we will bring our experience in national and local markets, best-in-class service, and comprehensive terminal and logistics solutions to our customers,” Matthew Satnick and Philippe De Montigny, Co-CEOs of Enstructure, said in a statement. “Additionally, we will be working alongside the International Longshoremen’s Association (ILA), the Delaware Building and Construction Trades Council, and the Teamsters to grow operations at the Port, revitalize Port facilities and infrastructure, and maximize economic development and union job growth opportunities along the way, all while improving the experience for the long-standing customers of the Port of Wilmington. We are also excited to continue working with the DSPC to bring the potential Edgemoor development project to life.”

 Under the terms of the original concession agreement, GT USA Wilmington was required to spend $250 million to advance the Edgemoor project by the end of 2020 – a timeline that was not met, at least in part due to the impact of the COVID-19 pandemic. It was expected to invest upward of $500 million within the first decade.

To pay for the bevy of improvements, GT USA Wilmington obtained a $350 million leasehold mortgage on the port operations in January 2019, principally predicated on its holding of the core concession agreement, according to county land records. It was required to maintain good standing on its concession agreement to tap the funding though.

After its financiers forced the Emirati subsidiary company to replace its board and leadership following several years of reported deficit cash flows, however, GT USA Wilmington was unable to identify alternative long-term financing for the Edgemoor project. Meanwhile, the DSPC began to apply for permits and pay for work to advance the desired Edgemoor project, also in violation of the concession agreement with Gulftainer that required it to bear those costs.

In the company’s first public statement regarding the Wilmington operation transfer, Gulftainer CEO Peter Richards said that “GT Americas has decided to step away from the development of the Port of Wilmington.”

“Whilst the significant contributions made by Gulftainer in Wilmington over the last four and a half years have been fully recognized by all stakeholders and have embellished Gulftainer’s successful track record of creating highly productive port operations, the evolved economic conditions and future financial viability did not meet our threshold for continued investment,” he added. “Adhering to strict financial discipline has been central to the success of Gulftainer over the years. When investing in trade infrastructure and services, our goal is to serve our global customers and we remain committed to investing in the right projects worldwide, that have an appetite for foreign direct investment.”

The concession agreement will be extended about 55 years to Oct. 1, 2078, and Enstructure will agree to not operate any international shipping container handling terminals in Baltimore or on the Delaware River.

Under the agreement, Enstructure would pay an annual concession fee of $1 million – a reduction of 66% from Gulftainer’s $3 million annual fee – that will increase annually by the lesser of 5% or the annual consumer price index. Following negotiations with the state, Enstructure has agreed to reset its annual concession fee after seven years to between $1.5 million and $2 million, depending on port revenues, with the escalator clause still in effect.

Although the future of Edgemoor weighed heavily on the operator change, DSPC officials were also frustrated by the amount of investment needed at the current port too.

Included in the estimated funding commitments is $65 million in upgrades at the Port of Wilmington over the next five years, depending on operational growth.

Enstructure will also make a single, non-refundable payment of $21.5 million to move the 100-acre Edgemoor container port ahead and include its adjacent 25-acre, waterfront parcel currently home to its Port Contractors Inc. subsidiary to the port plans, increasing the project’s shoreline by about 45% and its total acreage by 30%. Gov. John Carney has likewise committed $50 million from the state’s American Rescue Plan Act funds to advance Edgemoor.

The company is reportedly already in discussions with a global carrier regarding the development of Edgemoor as a best-in-class container terminal. That carrier may be South Korean shipping company HMM, formerly known as Hyundai Merchant Marine, according to state documents.

“The Port of Wilmington and its workforce are critical to Delaware,” State Rep. Valerie Longhurst and State Sen. David Sokola, who approved the Enstructure deal as part of the legislative concurrence committee, said in a joint statement. “Thousands of Delaware families rely on the good-paying jobs that come from our port. We look forward to working with Enstructure as the new long-term operator and investor in one of Delaware’s most important assets.”

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