Dubai Separates DP World From Debt Troubles

The government of Dubia moved Friday to insulate container terminal operator DP World from the debt crisis hitting Dubai World, the state-controlled industrial conglomerate and parent of the port business. 

The Persian Gulf emirate sought to reassure ocean carriers and shippers about the position of DP World after it announced Wednesday that it is seeking a six months standstill on approximately $5.7 billion in Dubai World’s debt obligations.

The announcement shocked the financial world, and stock markets around the world fell Thursday.

Dubai, one of the seven emirates making up the United Arab Emirates, said the terminal operator is not part of the restructuring process.

“The government of Dubai has confirmed that DP World and its debt are not included in the restructuring process for Dubai World,” the government said in a statement Thursday.

Dubai World, which has total debts of $59 billion, acquired the UK’s P&O Ports in 2006 and also owns Dubai Dry Docks, a ship repair and conversion facility, and Jebel Ali free trade zone.

The request for a debt standstill centers on Dubai World’s Nakheel Properties, the world’s biggest privately held real estate company.

DP World, the world’s fourth largest box terminal operator, reported in October its third quarter traffic fell 6 percent from the same period in 2008, signaling a recovery from steep falls in the first half of the year.

The company said this left traffic in the first nine months of 2009 approximately eight percent lower than a year ago, but it did not give figures.

DP World’s first half net profit fell 34 percent to $187.7 million from $275.3 million in the first six months of 2008 and revenue shrunk to $1.38 billion from $1.59 billion.

The terminal operator handled 46.8 million 20-foot equivalent units at 50 terminals in 32 countries in 2008.