DP World opponents: e-mail shows DP World not selling U.S. terminals
Sen. Charles Schumer pointed Tuesday to an internal e-mail from P&O Ports North America about retaining its partial stake at a Miami port terminal as evidence that Dubai Ports World does not intend to spin off the company as implied last week.
But P&O officials contend that the correspondence covers budget matters and simply refers to the fact its Florida subsidiary does not intend to change its ownership stake in the Port of Miami Terminal Operating Co. (POMTOC) no matter what DP World decides to do with the parent company.
DP World acquired British ports operator Peninsular and Oriental Steam Navigation Co. March 8 for $6.8 billion, but subsequently announced in response to intense opposition in Congress over security concerns that it would transfer its U.S. operations to a U.S entity in a way that prevented the company from taking a loss. The vague statement raised questions among lawmakers and analysts about whether DP World intended to completely severe all financial ties to the U.S. business, or try and establish a subsidiary, or outside contractor, wholly managed and directed by U.S. citizens, with profits going to some sort of trust fund.
“I want to tell DP World and all of America, including the
administration, we will do whatever it takes to make sure that American ports and DP World are totally separate. That’s what the American people want; that’s what Congress wants,” Schumer said at a Capitol Hill press conference, according to a transcript of the event.
Schumer said the e-mail from Robert Scavone, executive vice president of P&O Ports North America, to POMTOC officials is proof that DP World is trying to hide the fact that it does not intend give up ownership of the company.
“I myself am not aware of anything about (the pending situation) that would alter the ownership of POMTOC, so unless one or both of our esteemed partners have separately advised you that they plan to sell their interests, you should assume for your own purposes of managing the company that ownership of POMTOC is not going to change. And even if they do plan to sell, that would probably take awhile,” Scavone said in the e-mail.
P&O Ports Florida owns 50 percent of POMTOC. The other shares in the terminal are evenly split between a subsidiary of Fort Lauderdale-based Eller & Co. and Florida Stevedoring. P&O Ports North American owns P&O Florida through another subsidiary in Mississippi that is incorporated in Louisiana.
The e-mail was circulated to reporters Monday by an Eller representative.
Eller is embroiled in a long-standing dispute with P&O, and tried to block the sale in Florida and British courts. The company argues that it is being made an involuntary partner of DP World, and that it will lose business if the federal government or port authorities restrict DP World’s ability to do business in the United States because the United Arab Emirates served as a base for some of the Sept. 11, 2001 terrorists.
In an interview, Scavone said that P&O Ports Florida is not selling its stake in the joint venture, and that any changes involving the parent company will not impact the stake in POMTOC. The e-mail was intended to inform POMTOC managers that it’s business as usual at the port because the ownership at the local level will not change even if DP World sells or retains P&O Ports North America.
Eller “would love to argue that the transfer of the parent company in the United States amounts to a transfer of the share that P&O Ports Florida owns in POMTOC. They are wrong about that,” Scavone said, adding that Eller is upset that it was not given right of first refusal to match DP World and buy out P&O in Miami.
“They are trying to make the argument that if a corporation several layers up the chain gets sold that should trickle down and amount to a transfer” in the local joint venture, he said. P&O Ports Florida remains a partner in POMTOC under U.S. corporate law, he said.
“It’s like your rich uncle who buys 20 percent of Microsoft. It doesn’t change fact that Microsoft owns whatever it owns,” Scavone said.
“We think that document is the absolute smoking gun and that the emir of Dubai has no intention of relinquishing this asset,” said Michael Kreitzer, a lawyer who represents Eller.
He said even an indirect change in ownership affects the joint venture membership agreement.
Schumer called for DP World to provide more details about its plans for P&O Ports North America. He said he will press to move legislation in the Senate forcing DP World to give up its U.S. stake if it doesn’t do so on its own.
The House is expected to vote today or Thursday on a measure banning the transaction from taking effect in the United States.
Industry sources said DP World is expected to make an announcement this morning to explain how they plan to handle the divestiture.