DP World sells 75pc stake in Aus­tralia unit to Citi In­fra­struc­ture

The Pak Banker - - Company & Boss News -

DUBAI: DP World Ltd., the Dubai-con­trolled con­tainer ter­mi­nal op­er­a­tor, raised A$1.5 bil­lion ($1.5 bil­lion) sell­ing a stake in its Aus­tralian unit as its par­ent works to re­duce debts, Bloomberg re­ported .

Citi In­fra­struc­ture In­vestors and a part­ner agreed to buy 75 per­cent of the unit, which op­er­ates ter­mi­nals in five Aus­tralian ports, DP World said in a state­ment to­day. The com­pany ex­pects reg­u­la­tory ap­proval for the trans­ac­tion by the end of the first quar­ter.

DP World plans to use all the pro­ceeds to re­pay bor­row­ings, as par­ent Dubai World de­layed pay­ment on more than $30 bil­lion of debt and un­paid bills built up by con­struct­ing palm-shaped is­lands off the Dubai coast, and amass­ing stakes in com­pa­nies in­clud­ing lux­ury re­tailer Bar­neys New York Inc. and U.S. casino group MGM Mi­rage. The deal will also pare DP World's re­liance on Aus­tralia as pend­ing com­pe­ti­tion from Hutchi­son Port Hold­ings Ltd. threat­ens its mar­ket share of about 50 per­cent.

"The Aus­tralian as­sets are great, but it could be a good time to mon­e­tize it be­cause we don't know whether the re­cent strong per­for­mance is sus­tain­able," said Red­wan Ahmed, a Dubai-based an­a­lyst at EFGHer­mes Hold­ing SAE. "The share has ral­lied re­cently and this deal is al­ready priced in," said Ahmed, who has a "neu- tral" rat­ing on the stock.

DP World rose as much as 5.5 per­cent to 63.5 cents and traded at 63.4 cents as of 11:19 a.m. in Dubai, giv­ing the com­pany a mar­ket value of $10.5 bil­lion.

The com­pany had net debt of $5.4 bil­lion at the end of June, ac­cord­ing to its first-half re­sults state­ment.

The deal "pro­vides a great op­por­tu­nity for DP World to re­main ac­tively in­volved in Aus­tralia whilst de­liv­er­ing on our strat­egy to mon­e­tize as­sets as part of DP World's on­go­ing goal to re­duce lever­age and fo­cus on higher mar­gin mar­kets," Chief Fi­nan­cial Of­fi­cer Yu­vraj Narayan said in the state­ment.

The ter­mi­nal op­er­a­tor had to­tal long-term li­a­bil­i­ties of $9.3 bil­lion at the end of June, ac­cord­ing to its first-half re­sults.

DP World Aus­tralia runs ter­mi­nals in Bris­bane, Syd­ney, Mel­bourne, Ade­laide and Fremantle with a ca­pac­ity of more than 3.5 mil­lion 20-foot equiv­a­lent units a year, ac­cord­ing to the state­ment. The Aus­tralian unit had earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­za­tion of A$96 mil­lion in 2009, it said.

DP World Aus­tralia and As­ciano Ltd.'s Pa­trick unit each han­dle about half of the nation's con­tainer ship­ments, UBS an­a­lysts led by Simon Mitchell said in a Dec. 6 note. DP World's mar­ket share may fall to 36 per­cent over the next five years and Pa­trick's to 43 per­cent, as Hutchi­son, the world's largest con­tainer-ter­mi­nal op­er­a­tors, adds fa­cil­i­ties in Bris­bane and Syd­ney, they said.

Sales of Aus­tralian busi­nesses this year have more than dou­bled to $115 bil­lion from a six-year low in 2009, as buy­ers sought as­sets in one of the few de­vel­oped mar­kets to avoid re­ces­sion dur­ing the global fi­nan­cial cri­sis. To­day's trans­ac­tion takes the value of such deals this quar­ter to $59 bil­lion, the most on records dat­ing back to 1998, ac­cord­ing to data com­piled by Bloomberg.

DP World, which op­er­ates 50 ter­mi­nals across Asia, Europe, Africa and the Amer­i­cas, said Oct. 25 thirdquar­ter cargo-vol­ume grew 14 per­cent to 13 mil­lion con­tain­ers, af­ter a global trade re­bound in­creased freight han­dling. Traf­fic fell 8 per­cent last year as the world­wide re­ces­sion cut de­mand for mov­ing goods.

Sec­ond-half earn­ings are likely to be bet­ter than the first, DP World said Aug. 18, af­ter re­port­ing a bet­ter-than-fore­cast profit in the six months to June of $176.6 mil­lion.

More­over, The Na­tional re­ported DP World's shares rose to their high­est level in two years af­ter the com­pany sold a $1.5 bil­lion stake in its Aus­tralian unit to help cut down on debt.

Shares in the Dubai-con­trolled con­tainer ter­mi­nal op­er­a­tor rose 4.6 per cent to 63 cents on Dubai's sec­ond bourse, NAS­DAQ Dubai. It gives the com­pany a mar­ket value of $10.5 bil­lion.

"It shouldn't come as a sur­prise as they have been mulling an IPO [of the Aus­tralian unit] since Jan­uary," said She­hzad Janab, head of as­set man­age­ment at Da­man In­vest­ment.

"We knew they had var­i­ous in­ter­na­tional parcels and that left the Aus­tralian as­sets. Af­ter the reshuf­fle, it was ei­ther an IPO or a trade sell," he said.

The Dubai Fi­nan­cial Mar­ket (DFM) Gen­eral In­dex rose 0.3 per cent to 1,630.78 points and the Abu Dhabi Se­cu­ri­ties Ex­change Gen­eral In­dex slipped 0.06 per cent to 2,696.79 points.

En­ergy gi­ant Taqa was one of the top gain­ers in Abu Dhabi, as it rose 1.4 per cent to Dh1.47. It se­cured a $3 bil­lion re­volv­ing credit fa­cil­ity from 20 in­ter­na­tional banks, which will be used as part of its ex­pan­sion plans.

In Dubai, Emaar Prop­er­ties led the mo­men­tum as it rose 0.6 per cent Dh3.51, re­vers­ing losses it made.

Oil fu­tures gained 1.1 per cent to $89.82 a bar­rel in New York, the high­est since Oc­to­ber 2008, as signs of US eco­nomic re­cov­ery buoyed in­vestor spec­u­la­tion that fuel de­mand will in­crease in the world's largest oil con­sumer. -PB News

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