Friday, March 03, 2006

Patriotism? Profiteering? Or, Just Plain Old Political Positioning?

Eller & Co. makes Buy-American play for P&O

The Eller & Co., the Fort Lauderdale-based stevedoring company that has filed suit and asked Congress to block the sale of P&O Ports North America to a state-owned terminal operator in Dubai, now says it is interested in buying some or all of the port facilities if the deal is thwarted.
DP World's $6.8 billion takeover of Peninsular and Oriental Steam Navigation Corp. and its 30 terminals around the world is scheduled to close today, even as the uproar over the sale continues to embroil Washington and the nation. A majority of Congress and the American public oppose the sale to the sheikdom because they are concerned that some of the Sept. 11, 2001 hijackers received aid in the United Arab Emirates and that terrorists could infiltrate the company to launch an attack through vulnerable U.S. ports.

After Congress threatened to stop the transaction, DP World agreed last week to put P&O's North American operations in a kind of operational escrow that would insulate local executives from corporate headquarters while the Bush administration launches a second, more in-depth, investigation of the company.

But with a letter from the Bush administration approving the deal already in hand, DP World is proceeding to finalize the sale and take ownership of the entire company. It will receive revenues as a hands-off, passive investor in the North American business. Some lawmakers and Eller representatives argue that once DP World owns the U.S. facilities it will be hard to roll back that portion of the sale in court.

Eller subsidiary Continental Stevedoring & Terminals is a joint venture partner with P&O at the Port of Miami Terminal Operating Co. where it handles cargo for P&O. The company has filed suit in Florida and Britain asking judges to block the sale because it is being involuntarily dragged into the deal to work for Dubai Ports World. It also claims it would suffer millions of dollars in lost business if security concerns lead the U.S. government to revoke approval of the deal or the Miami port authority to find fault with P&O's contract and terminate the joint lease.
Joseph Muldoon III, a lawyer who represents Eller & Co., lobbied members of Congress Wednesday to block the sale and force P&O to divest its North American ports subsidiary.
"I'm afraid if Congress doesn't act they may be immune from something from the courts," Muldoon said in an interview.

On Sunday, Eller said in a statement that the U.S. terminals should be placed in the hands of a court-appointed receiver until the administration completes its investigation and sorts out its differences with Congress about the sale. If the sale is disapproved the receiver would control the assets until a buyer could be found.

"I think what is needed here is an American operator in order to quell the furor" over the sale, Muldoon said.

Eller, which played a role bringing the issue to the public's attention, has cast its opposition to the sale on national security grounds, saying DP World can't be trusted to comply with U.S. maritime security rules.

But Muldoon told Shippers' NewsWire last week that he believed there were several U.S. companies willing to manage the P&O terminals if given the chance, and Wednesday he acknowledged that Eller & Co. itself is interested in the buying some or all of the facilities, depending on how the deal is structured.

P&O Ports North American represents about 6 to 10 percent of the value of the entire P&O operation, according to DP World officials. Muldoon said Eller would be willing and able to bid on the U.S. assets, which have an estimated value of $400 million to $600 million based on the current sale price.

Eller would consider many options, including being part of a group of investors, to buy the P&O terminals.

Eller is a relatively small terminal operating company, with stevedoring and agency activities in Florida's Port Everglades, Tampa and Port Canaveral, as well as Miami.

Representatives for the privately held company were unable to provide revenue figures. However, the Associated Press reported that in the company’s court filings in Britain, Eller placed the potential loss of business in Miami at $150 million a year.
This looks like a boondoggle to me...Eller doesn't have the cash, executive management, or industry scope to deal with this issue...or to purchase the terminal operations (even if they would be part of a consortium). This smacks of plain old positioning or politics, and has nothing to do with safety concerns or increased exposure to terrorism our ports may have under DP World. We need to move on and concentrate on things we can control within DHS, Customs, the Coast Guard, and the State Port Authorities.


Post a Comment

<< Home