February 28, 2006

Connecting Dubai Ports World, the Carlyle Group, CSX, John Snow, and David Sanborn

A BUZZFLASH NEWS ANALYSIS
by A BuzzFlash Reader

Dear Buzz,

Remember these two names: John Snow and David Sanborn. Then remember these three companies: Carlyle Group, CSX, and Dubai Ports World.

= = = = = = = = = = = = = = = = = =

PART OF CSX -- namely, CSX Lines -- was sold to ...drum roll, please.... The Carlyle Group, early in Feb. 2003, for $300 million.

One of the biggest customers of CSX Lines is the US military.

John Snow, the CEO of CSX, was appointed Treasury Secretary by Bush jr. on Feb. 7, 2003.

Read about this cozy deal at:
http://www.bridgedeck.org/mmp_news_archive/
2002/mmp_news021219.html

and at: http://observer.guardian.co.uk/iraq/story/0,12239,919897,00.html

= = = = = = = = = = = = = = = = = =

David Sanborn was an executive with CSX and, then, a senior Dubai Ports World executive whom Bush appointed last month to be the new administrator of the Maritime Administration of the Transportation Department.  Sanborn worked as Dubai Ports World's director of operations for Europe and Latin America.

Gee, d'ya think Sanborn greased the skids for Dubai Ports World to get Bushite approval to run operations at six of our nation's ports?

D'ya think?

<<Lawmakers from both parties have noted that some of the Sept. 11  hijackers  used the United Arab Emirates as an operational and financial base. In addition, critics contend the UAE was an important transfer point for shipments of smuggled nuclear components sent to Iran, North Korea and Libya by a Pakistani scientist. >>

Read more at: http://tinyurl.com/maq6x

= = = = = = = = = = = = = = = = = =

More about DAVID SANBORN  and JOHN SNOW at: http://tinyurl.com/gyflb

<< I am surprised that nobody here has mentioned the most obvious connections -- Treasury Secretary John Snow, and brand-spankin’-newbie-crony David Sanborn.

John Snow was formerly CEO of CSX ... David Sanborn was an executive with CSX/Sea-Land division.

Then SANBORN left to become a director with Dubai Ports World and brokered a deal for Dubai Ports World to purchase the South American and Asia port operations from CSX. Now -- just two weeks ago -- Sanborn is introduced as the new Assistant Secretary of Transportation -- Marine Administration.

Then the quasi-secret "Committee on Foreign Investment in the United States" (CFIUS), which is chaired  by John Snow, makes this ruling.>>

http://tinyurl.com/gyflb

And I would bet that the law firm Baker Botts, of which James A. Baker III is a major partner,  had a hand in this. James A. Baker III  is also affiliated with the CARLYLE Group.

Why do we care about the Carlyle Group? I'll answer that by telling you who some of the investors are? Among the firm's multi-million-dollar investors were

-- members of the family of Osama bin Laden
-- George Bush Sr
-- former British prime minister John Major
-- Frank Carlucci - Ronald Reagan's defense secretary
-- James A. Baker III

Read more about The Carlyle Group at:
http://www.guardian.co.uk/wtccrash/story/0,1300,583869,00.html

= = = = = = = = = = = = = = = = = =

Masters, Mates & Pilots Wheelhouse Weekly
Feb. 2006 (original date of this unknown, but it is around Feb. 2003)

<<  MM&P-contracted CSX Lines, the US-flag container shipping subsidiary of CSX Inc., will be sold to the CARLYLE  GROUP, a private equity firm based in Washington, DC for $300 MILLION. The acquisition will give CARLYLE control over the nation's largest Jones Act container fleet and will add to the company's growing transportation portfolio.

CSX Lines will be renamed Horizon Lines LLC, when the transaction is completed early next year pending regulatory approval. CSX Lines is the nation's largest ocean transport company, with 17 US-flag vessels and 22,000 containers, providing ocean transportation and logistics services to and from the US, Alaska, Hawaii, Guam, and Puerto Rico.

CARLYLE's other maritime holdings include Seabulk International, formerly Hvide Marine, which owns and operates 10 Jones Act tankers in the Gulf of Mexico. Through United Defense Industries, CARLYLE controls United States Marine Repair, the nation's largest non-nuclear ship repair and conversion company.

Carlyle Group is a politically-connected global private equity firm with reportedly more than $13.9 billion under management. The company's directors and advisors include former President George H.W. Bush, former British Prime Minister John Major, and former Secretary of State JAMES BAKER III. IBM Chairman Louis Gerstner is slated to become chairman of Carlyle on January 7, replacing former Secretary of Defense Frank Carlucci.

John Snow, the CEO of CSX, was appointed Treasury Secretary by the younger President Bush last week. The current CSX Lines President and Chief Executive Charles Raymond and his management team will remain in place. Raymond will also serve as chairman of the board.>>

Read this at: http://www.bridgedeck.org/mmp_news_archive/
2002/mmp_news021219.html

After I learned the above about the Dubai Ports World deal... along with tidbits about CSX Lines and its purchase in Feb.. 2003 by The CARLYLE Group ... I came upon an article that asked WHY in the world The Carlyle Group would buy such a motley assortment of old boats.

Well, in one year, The Carlyle Group's purchase price of $300 million to buy the CSX lines, which it RENAMED Horizon Lines, was turned into a hefty PROFIT of ... drum roll, please ... $350 million.

Carlyle bought CSX LInes for $300 million in Feb, 2003, and sold it (as Horizon Lines)  in March of 2004 for $650 million.

Nice profit.

= = = = = = = = = = = = = = = = = =

Comment On The Maritime News
by Tim Colton
March 5, 2004 [NOTE DATE]

<< The news that Horizon Lines [formerly CSX Lines] is for sale again, only 15 months after CSX sold it to CARLYLE  GROUP, confirms what I've suspected all along, that Carlyle Group never understood what it was getting into.  Due diligence is not, apparently, a concept with which Carlyle Group is familiar.

Here's what I wrote at the time (and read my position paper on this subject by clicking here):

- - - - - - - -
WHY WOULD CARLYLE WANT CSX LINES, ESPECIALLY AT THAT PRICE?

by Tim Colton
December 19, 2002

Why would anyone want to be a Jones Act operator?  Why, in particular, would an investment group that's heavily involved in the defense industry, and doesn't have a CCF, want the collection of floating razor-blades that constitutes the bulk of the CSX Lines fleet (see below).  A total of 16 ships, with an average age of 25 years.  Only 3 of the 16 are under 20 years old: the other 13 have an average age of 28.  And these 13 ships are not only old, they're also steam-powered: it's getting harder every year to find marine engineers who can remember what a steam plant looks like.

CARLYLE is paying $300 million for a company that had net earnings last year of $17 million on total revenues of $681 million, an unimpressive 2.5%.  Its net cash flow was, wait for it, zero.  The book value of its fixed assets at the end of last year was $167 million.  The scrap value of the 13 old ships is around $30 to $35 million, total, and their replacement cost is over $1 billion.

So, if Carlyle didn't buy CSX Lines for its income, and it didn't buy it for its assets, and it can't have bought it for its cash flow, why did it buy it?  Somebody please explain this deal to me.
- - - - - - - -

[NOTE FROM ME: The  ANSWER  is below.]

Read this at: http://www.coltoncompany.com/comment/comment2004q1.htm

= = = = = = = = = = = = = = = = = =

The New York Times
May 25, 2004

<< Castle Harlan, a New York private equity firm, said yesterday that it had agreed to buy Horizon Lines, a container shipping company, for $650 million from the Carlyle Group, another buyout firm.

Horizon, which owns 16 vessels and about 21,700 cargo containers, generated fiscal 2003 revenue of more than $830 million, Castle Harlan said.

Carlyle acquired Horizon from CSX in February 2003. The company handles more than a third of marine container shipments between the United States mainland and the ports of Alaska, Guam, Hawaii and Puerto Rico, the companies said. >>

Read this at: http://query.nytimes.com/gst/fullpage.html?
res=9A00E7DA143EF936A15756C0A9629C8B63

= = = = = = = = = = = = = = = = = =

READ ABOUT Castle Harlan, Inc. at: http://www.castleharlan.com/

Castle Harlan's holdings at: http://www.castleharlan.com/letter/default.html

The US military is one of the biggest customers of CSX Lines, which The Carlyle Group had RENAMED as Horizon Lines before selling it to Castle Harlan. <http://observer.guardian.co.uk/iraq/story/0,12239,919897,00.html>

Another part of Castle Harlan, Castle Harlan Partners II  (CHPII), owns the Statia Terminals Group N.V., one of the world's largest independent Marine terminal companies.

<<One of the world's largest independent marine terminal companies. Statia owns large storage and trans-shipment facilities in the Netherlands Antilles and in Nova Scotia that accommodate the world's largest oil tankers. CHPII completed the purchase of the company in December 1996 for $235 million.>>
http://www.castleharlan.com/profiles/statia.html

My head is spinning.

A BUZZFLASH NEWS ANALYSIS

BACK TO TOP