By DAN FOX
TWC Enterprises Limited and Carnival Corporation & plc recently announced that the White Pass & Yukon Route Railroad is soon to be sold from the former to the latter.
A TWC press release stated it has entered into a purchase and sale agreement to sell the White Pass rail, merchandise and port operations to Carnival for proceeds of $290 million (with debt, taxes and liabilities estimated at $70-$80 million to be deducted from that number). The sale is set to close on July 31, 2018.
Carnival Corp.’s press release on the impending acquisition stated it plans to continue using Survey Point Inc. – subsidiaries of which include Cruise Lines Agencies of Alaska, Temsco Helicopters and Southeast Stevedoring – to manage White Pass’ daily terminal operation and the customer-relations aspect of the business.
Holland America Princess Alaska Tours – another part of Carnival Corp. – has executed a memorandum of understanding (MOU) with Survey Point, making Survey Point the managing partner of the port, the railroad and associated retail operations that Carnival plans to acquire from TWC. The release also states that Survey Point will own a majority stake in the railroad, with Carnival owning a minority.
“It’s exciting news,” White Pass President John Finlayson said. “I think its exciting news for the community, you’ve got two very solid, reputable companies kind of cooperatively entering into a joint venture that will see the railway continue to prosper and grow for many years to come.”
The deal has been in the works for some time, Finlayson said, with negotiations for the sale stretching back over two years.
“It was kind of an on-again, off-again thing for two years,” Finlayson said. “But when Carnival expressed interest, I think our immediate thought on their interest was that they would be great stewards of the company and of the community, and we felt good about it.”
In addition to the Carnival Cruise Line, Carnival Corp. operates the Holland America Line, Princess Cruises and Seabourn in the Alaska theatre, and several more cruise lines around the globe.
“We are in the process of assessing how best to operate the port and rail facilities in order to ensure that Skagway continues to be an amazing guest experience and one of our highest rated ports of call,” Carnival representative Chris Cradduck said in an email. “Carnival Corporation and Survey Point have entered into a Memorandum of Understanding whereby Survey Point would manage the day-to-day operations of the business. Once we have completed our assessment and have had an opportunity to finalize negotiations with Survey Point and its partners around a long-term partnership, we will be better positioned to speak as to any changes regarding the operation of the port.”
Cradduck said Carnival is “looking forward to working with the nearly 200 White Pass year-round and summer season employees.”
Throughout the past year, Skagway’s Borough Assembly had re-engaged White Pass in discussions of a tidelands lease agreement.
During that process, rumors that a cruise ship company planned to buy the railroad had been floating around town, and several community members had expressed concerns about a cruise ship company operating one or multiple of the port’s docks.
Cradduck said that Survey Point and its affiliates will manage the day-to-day operations of the railroad, and that Survey Point will also hold a majority interest in the overall enterprise.
“While Carnival will own a minority stake in the business, we will rely on Survey Point and its affiliates’ 40-plus years of experience in Skagway to continue to enhance the port as a thriving cruise and shore excursion destination, and foster collaborative working relationships with the community and cruise lines that call there,” Cradduck said.
One of the points of discussion in the proposed lease with White Pass, which the assembly had stepped away from in the spring, was over contamination in the Ore Terminal Basin. In an MOU between the borough and White Pass, the railroad had pledged several million dollars towards cleanup (the MOU was later suspended by the assembly).
“We view the environment, both at sea and on land, as one of our top priorities across each of our brands,” Cradduck said regarding that issue. “While it is premature to discuss any specific plans, we plan to continue our efforts as a strong and committed community partner.”
Steve Hites – owner of Skagway Street Car and a vocal advocate for Skagway taking more direct control of its waterfront – said there had been speculation the railroad had been put up for sale for over a year, and “this announcement ends all of the speculation.”
“That’s a good thing,” Hites wrote in an email. “There are huge challenges – and opportunities – ahead now.”
In the short term, Hites said currently there are Alaska cruise ship deployments being discussed by the cruise lines – ships that will need to have guaranteed places to berth in upcoming years.
“In the longer term there are new Yukon mines, and new northern oil and gas fields that will need a modern deep water port to use for inbound supply and for their outbound haul,” Hites said. “This announcement allows everyone to turn the page, roll up our sleeves and get to work together to begin the process of building out the Port of Skagway, Alaska, for the industrial demands of the 21st Century.”
Former Skagway Mayor Tom Cochran said he thinks the situation bodes well for the waterfront and community, adding it’s significant that Survey Point holds the majority interest in the railroad operation.
“They’re [Survey Point] kind of a local Alaska company,” Cochran said, adding that Survey Point has been closely involved in the cruise industry for a number of decades.
Like Hites, Cochran has pushed for Skagway to have a more active role in managing its port.
“I think it’s now more than ever critical that the municipality hire professional consultants to deal with the waterfront, and also hire a port director,” Cochran said.
The Borough Assembly did not openly discuss the situation at its recent June 7 meeting; it held a closed-door executive session over a “discussion of legal issues and legal options related to planning for the port of Skagway,” but no vote was take nor motion made following the multi-hour closed meeting. There were some community members that commented on the sale, however, during public comments earlier that evening.
Business owner Nancy Corrington said she wanted to thank the assembly and mayor for “persevering in their quest to do what’s best for the city regarding the White Pass MOU, and holding their ground on the short-term fix of an extended lease.”
“We applaud her [Carlson] and the assembly in believing in Skagway’s ability to stand up for what is best for Skagway,” Corrington said.
“I just hope that when considering a new lease with the new owners that the MOS [Municipality of Skagway] does not shortchange itself by negotiating a long-term deal that significantly underestimates the value of and the long-term potential this opportunity brings to Skagway.”