The financing of this project was unique as it is one of the first US port concession projects to be financed through the bond market. It was structured so that the private concessionaire could fund its obligations with tax-exempt finance.
A high-level summary of the upfront sources and uses of funds is outlined below.
Source of funding | Amount | Percentage | Uses |
Concessionaire equity | US$75 million | 22% | US$140 million to the MdTA as the purchase price of the terminal US$194 million to fund the terminal upgrade |
MEDCO Series A revenue bonds | US$167 million | 50% | |
MEDCO Series B revenue bonds | US$82 million | 25% | |
Free cash flow from port operation (estimate) | US$10 million | 3% | |
TOTAL | US$334 million | 100% |
• The US$140 million payment to the MdTA will be for investment in roads, tunnels, and bridge facilities in Maryland. This was partly funded with concessionaire equity and partly by Series A Economic Development Revenue Bonds issued by MEDCO.
• The cost of berth expansion (approximately US$105 million) will be principally funded from the proceeds of Series B Economic Development Revenue Bonds issued by MEDCO, the balance of the concessionaire equity, and some free cash flow generated by the operations of the terminal.
• PAC is the obligor on the revenue bonds, which are secured against PAC's interest in the concession and its assets.
• Moreover, PAC expects to invest a further US$500 million over the life of the concession to maintain and upgrade the terminal as necessary. This investment is forecast to come from free cash flow from the operation of the terminal.