Gantry cranes installed at the Kingston port. - File

Susan Gordon, Business Reporter

The Port Authority of Jamaica has recruited investment banker Merril Lynch to help restructure its $17 billion debt and raise capital to finance its ongoing expansion programme.

The National Contracts Commission has already endorsed a US$1.97 million ($129 million) contract to Merrill Lynch, but PAJ is keeping the details of the arrangement close to its chest, saying government was yet to sign off on the deal.

"We can't say much more until after Cabinet's approval," said spokesman for the Port Authority, Pat Belinfanti.

Long-term liabilities

According to Finance Ministry figures, the Port Authority had long-term liabilities of $13.4 billion in 2006, but projected that its borrowings would crest $17 billion in the current year, which closes March 31.

Those liabilities would have been boosted by previous borrowings - the authority finances all its projects, only requiring of the government occasionally that it backs its loans with guarantees - to continue building out the Kingston Container Terminal (KCT).

The port is currently undergoing its fifth phase of expansion, costing US$250 million (approximately J$16.7 billion).

The PAJ had projected spending of $5.5 billion of those funds in the 2006/07 for KCT 5 Western Expansion.

The contract endorsement by the NCC in February, described the award to be made to Merrill Lynch as covering financial advisory services and as lead arranger for debt restructuring and loan raising.

Belinfanti, PAJ's public relations officer, told the Financial Gleaner that US based Merrill Lynch would be responsible for renegotiating and funding cheaper sources of the money to reduce its expansion cost.

The company was chosen from four local and eight international companies which tendered for the contract.

"They were chosen as the PAJ felt they had the expertise to tap in the cheapest fund which will make substantial reduction in the cost," said Belinfanti.

"We were funding everything internally without going out for debt."

The KCT Phase V will build capacity at the port by 1.58 million TEUs, doubling its capacity.

"By 2010 we will have 3.2 million TEUS which will be utilised, and we want to take it to 5 million TEUS," said Belinfanti.

The next phase of the expansion will take in land at Fort Augusta.

susan.gordon@gleanerjm.com