Bruce Barnard | Dec 23, 2010 10:08AM EST
DP World sold a 75 percent stake in its Australian ports business to private equity firm Citi Infrastructure Investors for $1.5 billion.
The Dubai-based port operator said Dec. 22 it will retain 25 percent of DP World Australia and will continue to run its five container terminals under a long term management contract.
DP World expects to receive regulatory approval for the deal by the end of the first quarter of 2011.
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DP World, a unit a Dubai World, said it will keep all the proceeds from the sale to pay down debt.
The sale "provides a great opportunity for DP World to remain actively involved in Australia whilst delivering on our strategy to monetize assets as part of DP World's ongoing goal to reduce leverage and focus on higher margin markets," DP World Chief Financial Officer Yuvraj Narayan said in a statement to Nasdaq Dubai.
"This transaction, including the benefits of the long term management contract, will be earnings accretive for DP World from the time of completion," Narayan said.
The sale "wasn't done because we went into the market looking for partners, they approached us," Chief Executive Mohammed Sharaf said in a conference call.
DP World Australia operates container terminals in the ports of Sydney, Brisbane, Adelaide, Fremantle and Melbourne with a combined annual capacity of 3.5 million 20-foot equivalent units.
DP World Australia, which handles around 50 percent of Australia's container traffic, booked an operating profit of $96 million in 2009.
DP World, which was excluded from Dubai World's $30 billion debt restructuring, had net debt of $5.4 billion at the end of June.
The company, which plans to list its shares in London in 2011, increased first half net profit to $206 million from $188 million in the year earlier period and expects to post higher earnings in the second half.
Traffic at the company's 50 owned and managed terminals rose 14 percent in the third quarter to 13 million TEUs from 11.4 million TEUs in the same period in 2009.
-- Contact Bruce Barnard at brucebarnard47@hotmail.com.