UPDATE 2-Dubai World reluctant to sell port operator

Tue Sep 15, 2009 10:43am EDT

Related Topics

* Dubai World talks with equity player no longer ongoing

* Dubai World said in May was in talks to sell stake

* Shares up 3.6 percent

(Adds analysts' comments)

By Jason Benham

DUBAI, Sept 15 (Reuters) - Government conglomerate Dubai World, which is restructuring to cope with the global crisis, is not in talks to sell its flagship DP World DPW.DI to a regional private equity firm, DP World said on Tuesday.

Dubai World said in May it was in talks to sell part of DP World, one of the world's largest port operators, after it was approached by a regional private equity firm seeking to acquire a minority stake. [ID:nLA305682]

"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 firm said in a statement on Nasdaq Dubai.

"DP World has now been advised by Dubai World that these discussions are no longer ongoing."

Media had reported that five months of talks between Dubai World and Dubai-based private equity firm Abraaj Capital had collapsed after they failed to agree terms for the sale of DP World, which runs some 50 marine terminals in over 30 countries.

Abraaj Capital declined to comment when contacted by Reuters.

Analysts said Dubai World, which holds around $59 billion worth of Dubai's total $80 billion debt, was unlikely to sell its lucrative port operator and was more likely to sell part or all of its investment agency Istithmar World.

"DP World is their jewel asset," said Mahdi Mattar, a chief economist and strategist, at Shuaa Capital in Dubai.

"It's an extremely profitable company, has a positive cashflow and is one of the most competitive port operating companies in the world."

DP World's shares were up 3.6 percent at $0.495 a share at 1011 GMT, having hit a 46-week closing high on Thursday.

ISTITHMAR SALE?

Any potential sale may also have been derailed by financing difficulties or by Dubai World's restructuring, analysts said.

"Part of it is the financing, such a deal is going to be huge," said Samer al-Jaouni, general manager of Middle East Financial Brokerage Co.

"Getting the finance for this is going to be really difficult, given the liquidity problems, and even the foreign banks are not that (willing) to go in even as consortiums."

Dubai World hired AlixPartners, the turnaround experts advising on the General Motors [GM.UL] bankruptcy, to help restructure its business in June.

Dubai World's property unit Nakheel has $3.5 billion worth of Islamic bonds which mature on Dec. 14. Questions remain over the government's plan for those bonds, although a full repayment is the most likely scenario, analysts say. [ID:nLP85703]

Dubai World said on Friday the chief executive of Istithmar World, David Jackson, would continue to lead the firm, after reports his position was under review. [ID:nLB657541]

Dubai World did not comment on an earlier media report that its unit is freezing investments as part of a restructuring that may result in the sale of the fund or its assets.

"Istithmar World ... holds ownership stakes in other underlying businesses. While (Dubai World) may not sell the company as a whole, it may sell some of its investments," said Abdul Kadir, chief executive of Mashreq Capital in Dubai.

Dubai World, which owns U.S. luxury chain Barneys New York [DBWLDB.UL], in August hired an advisory firm to help it mull over options to shore up Barney's financial position.

(Additional reporting by Amran Abocar; Editing by Thomas Atkins and Lin Noueihed)

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