AIG infrastructure commitment breaks impasse over PNCT

AIG infrastructure commitment breaks impasse over PNCT Under strong political pressure, the Port Authority of New York and New Jersey on Friday reached a compromise on lease transfer payments that will allow terminal operator Dubai Ports World to move ahead with the proposed sale of its U.S. subsidiary to AIG Global Investment Group.
   Instead of reimbursing the port for previous investments, the parties said the new terminal operator would assist with future infrastructure improvements.
      The port came under strong criticism from Sens. Charles Schumer, D-N.Y., and Robert Menendez, D-N.J., for holding up DP World's approval to sell the operating rights at Port Newark Container Terminal (PNCT) to AIG in an effort to extract a transfer fee and share in the spoils from the rapid appreciation of its long-term lease.
   Analysts believe AIG offered to pay in excess of $1 billion for PNCT, terminal leases at four other Eastern ports and several stevedoring businesses. PNCT is considered the crown jewel in the bunch because it is located at the second-largest U.S. seaport.
   DP World officials late last week went public with their complaints that the port authority was seeking an 'administrative' fee of up to $84 million as a condition for granting consent to a new tenant at PNCT. The port authority responded that it needed to recapture the large capital investments it has made at PNCT because the expenditures on facility improvements helped drive up the price for the terminal. It said that money it received would be reinvested in port facilities to improve operations.
   The tentative deal calls for AIG's new subdivision, Ports America, to make capital expenditures of at least $50 million at PNCT during the course of the lease, including $10 million to be paid directly to the port authority for its development of port rail infrastructure surrounding PNCT.
   The port authority said it has determined that Ports America is a 'suitable' tenant that will help provide economic growth and jobs for the region.
   On Thursday, DP World warned that the sale to AIG was in danger of falling through unless the port relented. Representatives from all sides met early Friday and reached the compromise.
   'I'm glad the port authority has come to its senses. This is a solution that is good for everyone — the parties involved, the New York port, and most of all, the safety of our country,' Schumer said in a statement.
   Schumer led the charge last year to force DP World to divest the U.S. assets it acquired from British ports operator P&O, alleging that the Dubai government-owned company posed a potential threat as a conduit for terrorist smuggling operations through the U.S. terminals it controlled.