CSX faces $108 million pre-tax cost to settle Sea-Land sale dispute
CSX Corp. said on Wednesday that it has entered into two settlement agreements with Maersk, resulting in a pre-tax cost of $108 million for the Jacksonville-based company, to settle long-running disputes about the sale of international container-shipping assets of Sea-Land Service in 1999.
CSX included the charge, equivalent to $67 million after tax, in its third-quarter results (see related article). The charge amounts to an additional loss on the sale of Sea-Land. CSX sold Sea-Land’s international business for $800 million, substantially below book value, and recorded a loss of $401 million on the sale at the time.
“Resolution of the container shipping disputes, while subject to some conditions, will put behind us issues unrelated to our core business,” said Michael J. Ward, CSX chairman and chief executive officer.
CSX had previously admitted that it was involved in a dispute with the A.P. Moller/Maersk group over a final settlement for the sale of Sea-Land. CSX said its agreement to sell the international assets of Sea-Land to Maersk provided for a “post-closing adjustment” to the sales price, based on the change in working capital between June 25, 1999, and Dec. 10, 1999, when the takeover was concluded. CSX expected to receive about $60 million in connection with the post-closing adjustment, but this amount was in dispute.