DP World reaches deal on U.S. ports sale
A deal by DP World to sell six U.S. shipping terminals to American International Group is back on track after AIG committed to pay for at least $50 million in capital improvements in a compromise with New York and New Jersey port officials.
AIG and DP World, the company owned by the government of Dubai that was pressured by U.S. lawmakers to give up its U.S. assets, said Thursday the deal was in danger of falling through because of "unreasonable" demands from the Port Authority of New York and New Jersey. The agency, which must approve changes of control at its port in Newark, New Jersey, wanted a fee of as much as $84 million, the companies said.
"I'm glad the Port Authority has come to its senses," Senator Charles Schumer, a New York Democrat, said in a statement Friday. "This is a solution that is good for everyone — the parties involved, the New York Port, and most of all, the safety of our country."
DP World acquired U.S. terminals last year when it bought Peninsular & Oriental Steam Navigation, based in London, to become a leading container-port operator. Schumer and other U.S. lawmakers threatened to block the $6.8 billion takeover on the grounds that two of the Sept. 11 hijackers had come from the United Arab Emirates and that the plotters used the Gulf country's banking system to funnel money to the operation.
"In light of today's developments, we're confident the transaction will receive the required Port Authority consent," Michael Moore, a senior vice president for DP World, said in a statement.
AIG's asset management unit in New York "affirmed its plan" to make capital expenditures of at least $50 million, according to a joint statement from AIG and the Port Authority. The company will reimburse the agency $10 million it spent on an overpass to a railroad near the port. AIG also committed at least $40 million for future improvements. DP World will not have to pay anything, the Port Authority said.
AIG had "never committed to a specific number," said Stephen Sigmund, a spokesman for the Port Authority. "What we were looking for all along was a payment in part recognizing the public investment the Port Authority has put into the terminal, which is what the $10 million number is, and the commitment to capital investments, which is the $40 million."
Chris Winans, a spokesman for AIG, said the company was pleased to "reach a beneficial outcome."
"We look forward to a long and successful partnership with the Port Authority," he said.
DP World and AIG, the world's largest insurer, have not disclosed the terms of their Dec. 11 agreement. AIG will acquire the Newark terminal and five others, in Baltimore; Philadelphia; Miami; Tampa, Florida; and New Orleans, plus cargo-handling operations and a New York City passenger terminal.
AIG Global Investment Group manages $635 billion in assets, most of which are funds held to pay claims for the policyholders of its insurance businesses. DP World controls 51 port terminals in 30 countries including China, Australia, Germany and Venezuela.
AIG and DP World, the company owned by the government of Dubai that was pressured by U.S. lawmakers to give up its U.S. assets, said Thursday the deal was in danger of falling through because of "unreasonable" demands from the Port Authority of New York and New Jersey. The agency, which must approve changes of control at its port in Newark, New Jersey, wanted a fee of as much as $84 million, the companies said.
"I'm glad the Port Authority has come to its senses," Senator Charles Schumer, a New York Democrat, said in a statement Friday. "This is a solution that is good for everyone — the parties involved, the New York Port, and most of all, the safety of our country."
DP World acquired U.S. terminals last year when it bought Peninsular & Oriental Steam Navigation, based in London, to become a leading container-port operator. Schumer and other U.S. lawmakers threatened to block the $6.8 billion takeover on the grounds that two of the Sept. 11 hijackers had come from the United Arab Emirates and that the plotters used the Gulf country's banking system to funnel money to the operation.
"In light of today's developments, we're confident the transaction will receive the required Port Authority consent," Michael Moore, a senior vice president for DP World, said in a statement.
AIG's asset management unit in New York "affirmed its plan" to make capital expenditures of at least $50 million, according to a joint statement from AIG and the Port Authority. The company will reimburse the agency $10 million it spent on an overpass to a railroad near the port. AIG also committed at least $40 million for future improvements. DP World will not have to pay anything, the Port Authority said.
AIG had "never committed to a specific number," said Stephen Sigmund, a spokesman for the Port Authority. "What we were looking for all along was a payment in part recognizing the public investment the Port Authority has put into the terminal, which is what the $10 million number is, and the commitment to capital investments, which is the $40 million."
Chris Winans, a spokesman for AIG, said the company was pleased to "reach a beneficial outcome."
"We look forward to a long and successful partnership with the Port Authority," he said.
DP World and AIG, the world's largest insurer, have not disclosed the terms of their Dec. 11 agreement. AIG will acquire the Newark terminal and five others, in Baltimore; Philadelphia; Miami; Tampa, Florida; and New Orleans, plus cargo-handling operations and a New York City passenger terminal.
AIG Global Investment Group manages $635 billion in assets, most of which are funds held to pay claims for the policyholders of its insurance businesses. DP World controls 51 port terminals in 30 countries including China, Australia, Germany and Venezuela.
