The situation of Dubai World is serious

Despite Dubai government assurances that healthy Dubai Ports World is safe from the consequences of its sickly debt-ridden parent, Dubai World, fears continue to mount that the profitable terminal operator will not escape the financial crisis that has shaken the global financial community, The Shipping Gazette informs.
Moody's Investor Service has now downgraded DPW debt ratings because it says the restructuring of the parent will have an adverse impact on the subsidiary. Dubai World creditors will demand repayment at the expense of the state's logistics businesses, it is reasoned, and the Dubai government may have no choice but to sell its prized asset.
India's Economic Times reports that DP World may not be able to carry out its much-anticipated US$12 billion investment in Indian container terminals. DP World - the world's fourth-largest port operator - operates container terminals in Nhava Sheva, Chennai, Mundra, Vishakhapatnam and Kochi, and plans to set them up in Kulpi and Vallarpadam.
The company has invested more than $2 billion, the highest by any GCC firm in India, and had said it would spend $12 billion more in the next five years. DP World handled 4 million TEU in India in 2006, up from 2.5 million in 2005, according to a CLSA report.
DP World acquired the terminals at Mundra, Jawaharlal Nehru Port Trust (JNPT) and Chennai by taking over P&O in 2006. Dubai World also owns the warehousing property developer Gazeley.
The UK's Transport Intelligence (Ti) reckons Dubai Ports World's $4.7 billion debt is also large, but stable. It also has a cash balance of more than US$3 billion. Net profit for the first six months of 2009 was $188 million, though revenue fell 13 per cent to $1.3 billion year on year.
The crisis may have a big impact on the logistics sector, reports Ti. "The situation of Dubai World is serious, yet its problems are largely driven by its property development business. Its logistics businesses are generally sound and this is reflected in the Dubai government's assertion that Dubai Ports World is not subject to the 'debt -delay' of the wider Dubai World group, stating that, 'DP Ports World and its debt are not included in the restructuring process for Dubai World'."

Source:  Transport Weekly