The Los Angeles Harbour Department is selling around US$340 million of debt, after the risk of a crippling strike was reduced by a tentative agreement on health-care costs between longshoremen and shippers, reported Bloomberg.
The bond issue will be backed by revenue from the port. The port gets most of its receipts from tariffs on cargo and the rental of land and buildings, according to the offering.
According to bond documents, the sale will help refinance debt and upgrade facilities at the Port of Los Angeles. Proceeds will help automate container movement and reduce air pollution from ships docked at the port.
According to Soheila Sajadian, the harbour’s debt and treasury director, part of the deal will also refund 2006 bonds and save about US$7 million in debt service.
Karl Pan, chief financial officer of the harbour department said: “Anytime you eliminate any uncertainty that might in some people’s mind create some sort of risk, that’s good. I would hope for those that are concerned about the labour negotiations that this helps them reach a positive conclusion.”
Pan added: “We have to make sure our facilities are strong and efficient so that shipping companies will still want to dock their ships here, and cargo owners believe rightfully that coming through the Port of LA is advantageous for them.’’