Port operator's financial issues prompt board changes, pushback from key supporter

A Wilmington area lawmaker who had served as a key ally to the embattled leadership at the Port of Wilmington sent a letter to Delaware’s governor and secretary of state Monday expressing frustration that the operator of the publicly owned and privately run facility has not made a lease payment in more than a year – indicating a delinquent amount to taxpayers of at least $3 million.

Despite the “breach of contract,” Delaware has continued “to contribute financially to the port in ways that appear to conflict with the terms of the original lease agreement,” Rep. Debra Heffernan-D, Bellefonte, said in the letter.

She said she is “not inclined” to support new amendments to the state’s lease of the port to GT USA Wilmington until the facility’s financial problems “have been addressed to the satisfaction of the public and myself.”

Heffernan serves on the board of directors of the Diamond State Port Corporation – a taxpayer-owned entity that ran the port before its 2018 privatization and now oversees GT USA Wilmington’s operations.

On the same day Heffernan sent the letter, GT USA Wilmington created a new leadership team for its distressed operations at the Port of Wilmington, with a board of directors now composed of two corporate restructuring experts and one former cabinet member to Gov. John Carney.

Notably absent from the board is anyone from the original team at Emirati-based Gulftainer – GT USA’s parent – who won over state officials in 2018 with their port privatization bid.

The development comes less than a month after a judge directed GT USA Wilmington to pay more than $28 million to a ship loading company that previously operated at the Port of Wilmington.

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It also follows at least two tumultuous years for the company during which time it had suffered continuous losses, had defended itself against a string of lawsuits, had dealt with turnover in nearly all executive positions, and even had faced claims by one Delaware state senator that “all of the contractors on site” were not being paid.

Last year, Gulftainer executive Peter Richards told Port of Wilmington administrative employees that GT USA Wilmington previously had run “out of cash."

Over the past year, Delaware government officials provided few details about the true financial condition of the port, which generates thousands of well-paying, blue-collar jobs.

When asked Tuesday about the new board of directors, Secretary of State Jeff Bullock said GT USA’s creditors – to which it owes $100 million – “exercised their ability under a lending agreement to name an independent board with the goals of expanding growth” at the Port of Wilmington.

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He declined to say whether the creditors, a group reportedly led by AIG, had terminated GT USA under the terms of its lending contract.

When emailed for comment, an official for AIG -- a massive global insurance company -- referred the inquiry to its subsidiary Corebridge Financial, which declined to comment. Corebridge manages and invests more than $350 billion in assets.

GT USA Wilmington said in a statement Wednesday that it reconfigured its board as “a part of the further development of the Port.”

The company said securing the money to develop a new container terminal in Edgemoor – a key term of its lease deal with the state –  “is a central priority.”

“The Company continues to collaborate with its existing stakeholders to ensure additional capital is available for ongoing expansion plans,” GT USA's statement said.

The new board includes Tim Pohl and Michael Sullivan – each corporate restructuring consultants – and Mike Jackson, who served as director of the Delaware Office of Management and Budget between 2017 and 2020.

Last year, the financial publication Reorg Research Inc. was first to report that Pohl would serve on GT USA’s board of directors – reportedly at its creditors' behest – as the company grappled “with defaults asserted by noteholders and the need of new capital.”

In addition to the reshuffled board, the consultancy firm, Ankura, also is taking on a role at the Port of Wilmington, though its details have not been publicly disclosed. The company states on its website that its services include “guiding organizations through distressed situations.”

When asked, Bullock said in a text message that Ankura’s role is “to keep the solid growth at Wilmington moving forward and make sure Edgemoor gets built.”

Bullock declined to comment in detail about Heffernan's letter, though he said it included "numerous inaccuracies (which she already knew)." He said he cannot elaborate on what exactly is inaccurate.

In all, it is a dramatically different reality from that which was predicted in 2018 when Delaware officials celebrated Gulftainer’s 50-year lease of the Port of Wilmington. The privatization deal, as described then, promised to grow business at the Port of Wilmington's primary facility along the Christina River. The resulting prosperity would then "underpin" construction of a new container terminal at Edgemoor, a former DuPont chemical site north of Wilmington along the Delaware River.

Officials said then that the plan would stabilize the port's business by fending off competing ports, and could eventually double Delaware’s 5,700 port and maritime-related jobs.

This article originally appeared on Delaware News Journal: Port of Wilmington financial issues lead to board changes