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  • Writer's pictureThe San Juan Daily Star

HMS Global Maritime takes over ferry services from HMS Ferries

A proposed new amendment increases the maximum payable amount under the ferry service contract with HMS Ferries to $809.5 million without altering the term, and the Maritime Transport Authority consents to the assignment of the contract to HMS Global Maritime LLC, the operator’s parent company.

By The Star Staff

The Financial Oversight and Management Board approved with conditions an amendment to the contract between the Maritime Transport Authority (MTA) and HMS Ferries that would hike the ferry services contract costs by $56.6 million and transfer it to the operator’s parent company, HMS Global Maritime.

The operator and various of its affiliates are currently undergoing a Chapter 11 restructuring proceeding in the Southern District of Texas. According to the MTA, the proposed amendment is scheduled as an executory contract, which will be assumed and assigned to HMS Global as part of the Chapter 11 restructuring. The operator’s plan of reorganization was confirmed by the bankruptcy court on June 7, reducing its debt by $720 million.

“As such, the Proposed Amendment is conditioned upon the formal assumption and assignment becoming effective and on MTA providing the Oversight Board with the Operator’s formal notice of the effectiveness of the assumption and assignment as issued in its Chapter 11 case,” the oversight board said.

The initial contract approved with conditions by the oversight board on Sept. 30, 2020, stemmed from a tender issued on April 30, 2019 for the operation and maintenance of MTA’s ferry system between San Juan and Cataño, and between Ceiba and the offshore island municipalities of Vieques and Culebra. Specifically, the operator was selected pursuant to a public-private partnership organized by MTA in collaboration with the Puerto Rico Public-Private Partnerships Authority.

The contract has an estimated aggregate cost of $750.8 million and a term of 23 years, from its date of execution on Oct. 27, 2020 to Oct. 27, 2043, and is divided into two phases. Phase 1 constituted a three-year period in which MTA was to transfer the operation and management of the ferry system to the operator. Phase 2 comprises the 20-year period in which the operator is to provide all ferry services.

The contract was amended previously on Feb. 5 of this year to extend the Phase 2 commencement deadline from Jan. 25 to June 30 of this year, with the option to further extend upon mutual agreement, without altering the maximum payable amount.

In the proposed new amendment, which increases the maximum payable amount to $809.5 million without altering the term, MTA consents to the assignment of the contract to HMS Global Maritime LLC, the operator’s parent company. As such, HMS Global will have to satisfy all the operator’s obligations under the contract in the future.

The new amendment’s costs are to be covered entirely with general funds. Further, MTA must submit a budgetary reprogramming request through the Office of Management and Budget to reprogram $16.7 million of the maximum payable amount necessary to fund the proposed amendment.

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