DP World, which has played down talk of a possible sale of a stake, is making inroads into South America with the announcement that it will operate Brazil’s largest private multi-modal seaport after joining hands with Brazilian conglomerate Odebrecht to invest in the project.
DP World and Odebrecht together acquired a majority stake in Embraport, which is being built next to Porto de Santos, an existing port facility in Santos, a city in Sao Paulo state.
The Phase one development of the project is valued at around $500 million.
The first phase of the terminal development is scheduled to be finished in 2012, with a capacity of around 1 million teu and will be operated by DP World - its first project in Brazil.
Once complete, the project will be able to ship more than 1.5 million teu and about two billion litres of ethanol.
In the other development, DP World said it was not involved in talks over a potential sale of a stake, and talks between its parent company and a regional private equity player were no longer ongoing.
“The board of DP World would like to reiterate previous statements that they have not been involved in any discussions in relation to a potential sale of a stake in the company,” the Dubai-based firm said in a statement on Nasdaq Dubai’s bourse.
“DP World has now been advised by Dubai World (the parent company) that these discussions are no longer ongoing,” it added.
DP World issued the statement following a media report that Dubai-based private equity firm Abraaj Capital’s five-month old talks to buy a stake in the firm collapsed after both companies failed to agree terms, citing bankers familiar with the deal.
Abraaj Capital was not immediately available for comment when contacted by Reuters.
Shortly afterwards, DP World’s shares were up 0.8 per cent at $0.482 a share.
Any potential sale may have been derailed by financing difficulties or by a restructuring at Dubai World, analysts said.
Dubai World, in June hired AlixPartners, the turnaround experts who are advising on the General Motors bankruptcy, to help restructure its business.
“Part of it is the financing; such a deal is going to be huge. So getting the finance for this is going to be really difficult, given the liquidity problems, and even the foreign banks are not that much (willing) to go in even as consortiums,” said Samer Al-Jaouni, general manager of Middle East Financial Brokerage Co.
Parent company Dubai World said in May it was in talks to sell a stake in the port operator after it was approached by a regional private equity firm to sell a minority stake.
Dubai World said the chief executive of its Istithmar World unit, David Jackson, would continue to lead the firm, after reports his position was under review.
Dubai World has $59 billion of liabilities, a large proportion of the Gulf emirate’s total debt. The company, which owns US luxury chain Barney’s New York, hired in August an advisory firm to help it mull options to shore up Barney’s financial position.
UBS upgraded DP World to “buy” from “neutral,” and said it was poised to benefit from a strong recovery of global trade in 2010.
DP World posted a net profit after tax of $188 million during the first six months of the year from its portfolio of 49 marine terminals, a 32 per cent decline from $287 million in the corresponding period last year.
The consolidated throughput was 12.3 million teu compared with 13.6 million during the same period last year. It recorded revenues of $1.384 billion compared with $1.598 billion during the previous period.
