DP World port deal objection resolved

AIG unit will invest more in N.J. terminal

February 17, 2007|By Meredith Cohn | Meredith Cohn,Sun reporter

A tentative deal was reached yesterday between the Port Authority of New York and New Jersey and a Dubai company that has briefly run some U.S. port terminals, clearing the way for a sale that members of Congress demanded on national security grounds.

DP World acquired some management contracts at marine terminals in New York, Baltimore and elsewhere last year but was forced to put them up for resale after an election-year fracas on Capitol Hill that centered on foreign ownership at U.S. ports.

A sale was on the verge of going through to AIG Global Investment Group until the New York-New Jersey authority complained it would not be compensated for investments it had made in its Port Newark facility. Its lease allowed the authority to renegotiate with a new owner.

Both sides complained earlier this week that failed negotiations could scuttle the deal.

But yesterday, the parties said in a joint statement that they have reached an agreement in principle that will allow the sale. It calls on Ports America Inc., the port company formed by AIG, to make a minimum of $50 million in capital expenditures in the Port Newark Container Terminal. That figure includes $10 million earmarked for development of rail infrastructure surrounding the terminal.

"The parties believe that Ports America's commitment will help ensure the continued growth of jobs and economic activity at the port," the statement said.

The port authority had said this week that it was unsure that AIG would be a suitable new owner, able to make investments in its terminal.

It had levied the charge in a letter to DP World and AIG. Those two had sent a letter to the port authority early Thursday calling its demands for a multimillion-dollar fee unreasonable.

The dueling letters were made public, and by the end of the day had produced criticism from New York Sen. Charles E. Schumer and New Jersey Sen. Robert Menendez. The two Democrats said the authority was jeopardizing national security by holding up the sale, which is supposed to close in the first quarter.

Officials said they expect the sale will continue as planned. The New York-New Jersey authority was the last to give its approval.

"In light of today's development, we are confident the transaction will receive the required port authority consent," Michael Moore, a senior vice president at DP World, said in a statement. "And we hope to close the entire deal in March."


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