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AIG hits snag in port assets sale

The prospective new owner is asked to pay for renovations done on a New Jersey terminal.

February 15, 2007|From the Associated Press

Dubai Ports World, the company whose planned takeover of major port operations in New York and other U.S. cities ignited a political firestorm last year, may be headed for a new squall in its plan to sell off those operations to a U.S.-based company.

The Port Authority of New York and New Jersey is seeking tens of millions of dollars from the prospective new owner, AIG Global Investment Group, for improvements the port agency has made to the Port Newark Container Terminal in Newark, N.J., which AIG would operate.

Port Authority spokesman Stephen Sigmund said Wednesday that he could not put a precise figure on how much the agency should receive in cash payments or future work at the facility, but said the agency has spent $30 million in infrastructure developments since 2000.

Sigmund said Dubai Ports World has "made a pretty substantial profit here, and we want AIG to make a commitment to reinvest money in the capital projects so that we're sure they're going to operate the terminal responsibly."

Dubai Ports World is the world's largest marine terminal operator with 51 terminals in 24 countries.

The United Arab Emirates-based company struck a deal in December to sell AIG the U.S. operations, which include leases of marine terminals in New York/New Jersey, Philadelphia, Baltimore, Miami, Tampa, Fla., and New Orleans.

The deal also involves stevedoring operations in 16 locations along the Eastern Seaboard and Gulf Coast, and a passenger terminal in New York.

The U.S. holdings were valued last year at roughly $700 million, but the companies didn't disclose the sale price.

AIG Global Investment Group is an asset-management firm whose parent is New York-based insurance firm American International Group Inc.

The Port Authority has the right to consent to a new owner under the terms of its 30-year lease to run the Newark facility.

The negotiations between the port and the new operators are just the latest twist in a complicated global saga that began early last year, when Dubai Ports World won permission from the U.S. government to buy a company with extensive port operations in the United States.

That set off blistering criticism from U.S. politicians of both major parties, who said the deal could threaten homeland security. They cited the United Arab Emirates' support of Afghanistan's Taliban government before the Sept. 11, 2001, terror attacks and questioned whether the country or the company had done enough to keep out terrorist money and material.

Even as Dubai Ports World completed the acquisition on paper, political pressure forced the company to take a hands-off approach to operation of the U.S. assets and then agree to the asset sale.

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