Probes slow Dubai World’s Inchcape sale
An attempt by debt ridden, state-owned conglomerate Dubai World to sell its ports and shipping services subsidiary is being held up by a U.S. Justice Department investigation, according to a report Thursday by the Financial Times.
Dubai World intends to sell Inchcape Shipping Services (ISS), one of the more profitable entities in the company's portfolio of businesses, for roughly $800 million. Dubai World said in mid-2009 that it would be unable to meet debt payments on nearly $50 billion, and required a $10 billion aid from neighboring emirate Abu Dhabi. ISS is considered one of the most saleable assets because of its profitability and low debt burden.
However, bidders for ISS have apparently been spooked by the ongoing Justice Department investigation, which reportedly concerns 'the company's government services arm and possible wrongdoing over its contract to act as agent to the US Navy's fleet of warships in the Middle East,' according to the Financial Times report. The newspaper said the U.S. government declined to comment on the issue.
Dubai World should be well acquainted with scrutiny by the U.S. government. In 2006, a group of Congress members stonewalled the attempts of container terminal operator DP World, a subsidiary of Dubai World, to assume leases at a number of terminals in U.S. ports.