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Dubai World port arm cutting stake in Australia

Dubai World port arm cutting stake in Australia

December 22nd, 2010 by ADAM SCHRECK, AP Business Writer in News

DUBAI, United Arab Emirates (AP) - Dubai World's port management arm said Wednesday it is cutting its stake in five Australian ports through a deal with Citi valued at $1.5 billion.

Under the terms of the agreement, DP World will continue to manage the ports in Brisbane, Sydney, Melbourne, Adelaide and Fremantle. It says it will "monetize," or sell off, 75 percent of its shares in the Australian operations.

Unloading its stake to New York-based Citigroup's Citi Infrastructure Investors will help the sea cargo handler pay down debt while remaining active in the Australian market.

"We share a long-term commitment to invest in and grow our terminals in the region ... and together we look forward to building on our successful track record," DP World CEO Mohammed Sharaf said in a statement announcing the deal.

The Dubai-based company said it expects to retain its existing management and staff in Australia.

The $1.5 billion it plans to generate includes the repayment of balances held by its Australian operation to the parent company in Dubai.

DP World is one of Dubai's more profitable state-linked companies. It ranks as the world's fourth largest port operators, with business at 50 cargo terminals on six continents, including the Mideast's largest in Dubai.

It is part of the city-state's struggling Dubai World conglomerate, but was exempted from that company's $24.9 billion debt restructuring effort.

DP World said it will use the proceeds from the Australia sale to cut its debt. It expects the deal to close toward the end of the first quarter next year.