A.P. MOLLER EXPECTS NO IMPACT FROM THIRD-PARTY CLAIMS

A.P. MOLLER EXPECTS NO IMPACT FROM THIRD-PARTY CLAIMS    Targeted by several multi-million dollar claims related to its 1999 takeover of the international activities of Sea-Land Service, the Danish shipping group A.P. Moller said that it expects the claims to make no impact on its financial accounts.
   The Danish group was also found to provide little information about the disputes in its annual report, compared to CSX Corp., the U.S. company with whom it has not been able to agree on final terms for the takeover of Sea-Land’s international services.
   RST India Pvt. Ltd., the former agent of Sea-Land in India, has filed a suit in Mumbai (Bombay) High Court, for damages amounting to $49 million against both the buyers (A.P. Moller) and sellers (CSX Corp.) of Sea-Land.
   In a separate development, CSX Corp. and A.P. Moller are disputing a post-takeover closing financial payment related to working capital at Sea-Land, a former subsidiary of CSX, as well as other issues.
   And CSX said that it has advised Maersk — an affiliate of A.P. Moller — that it will hold it “responsible for any damages that may result” from a dispute with Europe Combined Terminals BV, the Dutch port operator, for an alleged breach of contract by Sea-Land. Europe Combined Terminals claimed $180 million from CSX.
   A.P. Moller confirmed that RST India Pvt. Ltd. has filed a lawsuit in India claiming $49 million. “Both CSX Corp. and A.P. Moller acting as managing owner for the two shipping companies, A/S Dampskibsselskabet Svendborg and Dampskibsselskabet af 1912 A/S, are named defendants,” said Michael V. M'ller, vice president, corporate secretariat at A.P. Moller.
   M'ller also said that the RST/Sea-Land Service agency agreement was terminated by Sea-Land around 1991, almost nine years before the Danish group acquired Sea-Land’s international liner activities from CSX.
   “We consider the claim against A.P. Moller — and CSX for that matter — as absurd and completely groundless,” M'ller said.
   On the question of potential liabilities related to the takeover of Sea-Land, M'ller referred American Shipper to A.P. Moller’s 2001 annual report.
   “With regard to the purchase of Sea-Land’s international liner activities in 1999, there are still outstanding issues concerning the final determination of the purchase price etc,” the report of the Danish shipping group said. “These issues are not expected to cause any adjustments in the accounts,” it added.
   The A.P. Moller annual report does not quantify the potential liability amounts concerning the disputes with CSX, nor does it mention the $49-million claim from RST.
   By contrast, the 2001 annual report of CSX says that it has recorded a receivable of about $70 million from Maersk related to the takeover. The amount and other dispute issues have been submitted to arbitration, CSX said. CSX’s annual report also provides information on the $180-million dispute with Europe Combined Terminals BV, and on it holding Maersk liable for subsequent damages.
   The CSX annual report for 2001 said that an adverse outcome in the Maersk and Europe Combined Terminals disputes “could have a material effect on the determination of the final loss on sale of Sea-Land’s international liner business.”