POINT COMFORT — The Calhoun County Navigation Industrial Development Authority approved issuing millions in revenue bonds to Max Midstream Texas at a meeting on Wednesday.
The company will use the bonds to finance a major oil exportation project that was announced last month.
Up to $85 million in tax-exempt revenue bonds were approved to finance or refinance the acquisition, construction, reconstruction, development, installation and improvement of dock and wharf facilities owned by the port that will be leased to Max Midstream or a subsidiary of the company.
Max Midstream is managed by President and Director Todd Edwards, of Houston, and S.C.P. MAX, a foreign for-profit corporation incorporated in Monaco that is under the direction of Azad Cola, who serves as a director at Max Midstream, according to Texas Secretary of State records.
Gregory Salinas, the port’s bond counsel, said the bond agreement is “not terribly unique” from other financing agreements the authority or port has made in the past apart from Max Midstream‘s project financing.
The company pledged to pay the bonds using revenue generated from the oil exportation, he said.
The financing method does not affect the port or development authority, which will have no liability or responsibility as to how the monies are spent or paid, Salinas said.
“Y’all are essentially lending your tax exempt status to the tax-exempt bonds, which gives the company a lower cost of bonds,” he explained to the authority.
A public hearing for the tax-exempt bonds was held prior to approval. No public comments were made.
The port authority’s board members make up the development authority, which acts on the port’s behalf.
The development authority also approved issuing up to $350 million in taxable revenue bonds to Max Midstream for refinancing or financing of the design, development, acquisition, construction, reconstruction, expansion, installation, equipping, ownership and operation of facilities that will be used for the company’s oil exportation project.
Those facilities include certain pipeline projects, tanks and other eligible infrastructure projects at Max Midstream’s Edna station and at the port.
Max Midstream is working with financial advisory firm HilltopSecurities to sell the bonds to qualified investors at a price and interest rate that is slated to be determined by Nov. 19.
The deal is set to be finalized on Nov. 30, Salinas said.
“As much as this is coming fast and furious, let me assure everybody on the board that there’s nothing unique about this transaction; there is no liability on the part of the board or the investment development authority,” he said. “And I can assure that we can get this deal closed on Nov. 30.”
In order to meet that deadline, the port will hold a special meeting next week to consider approving multiple leases and an easement agreement with Max Midstream for facilities and land owned by the Calhoun Port Authority that a few members of the board were not comfortable approving Wednesday.
Because board members did not get the documents until late Tuesday night, board members Luis De La Garza and Jay Cuellar asked for more time to review them.
“I’ve gone through one document extensively, I’ve scanned another one and I’ve yet to touch the third,” Cuellar said. “I don’t feel comfortable passing those right now … I don’t want to vote on something I haven’t had time to review.”