DP World Saga - Port Authority Letter

15 February 2007t

In response to your letter dated February 15, 2007 we would like to clearly state the Port Authority of New York and New Jersey's ("PA")'s position with respect to the sale of Port Newark Container Terminal ("PNCT").

As an initial point, the PA continues to be willing to negotiate an arrangement that is fair and reasonable to all involved and urges Dubai Ports World ("Dubai Ports") and AIG Global Investment Group ("AIGGIG") to return to the bargaining table, rather than extracting benefits through the press.

By way of background, it needs to be understood that Dubai Ports undertook to sell its PNCT interest with full knowledge that the PNCT lease expressly provides the PA with an unconditional consent right in the event of a change of control. Dubai Ports elected to proceed with the sales process without in any way discussing with the PA what requirements would need to be satisfied to obtain the PA's consent. This consent right is intended to ensure both the suitability of any terminal operator as well as to ensure that change of ownership does not occur continually to simply pull the value out of the public investments made without benefiting the long-term interests of the port.

The PA first requested due diligence information from Dubai Ports and AIGGIG, in writing, in December 2006 shortly after Dubai Ports first contacted the PA for its consent. This was approximately nine months after Dubai Ports initiated the sales process, and after Dubai Ports had signed a Purchase and Sale Agreement with AIGGIG. Two additional written requests for this information were made by the PA in January and February 2007. Only in the last 48 hours, and pursuant to the PA's insistence, have Dubai Ports and AIGGIG begun to share any of the information that the PA requires in order to exercise its fiduciary responsibility.

Instead of satisfying the PA's due diligence requests and continuing good faith discussions with the PA with respect to the sale, both Dubai Ports and AIGGIG have chosen instead to voice their position in the public arena, abruptly walking away from the negotiating table.

Despite its repeated requests, the PA has not yet received the records and information from Dubai Ports and AIGGIG to determine numerous facts, including the financial viability and the actual ownership of PNCT following the proposed sale to AIGGIG. The PA has a fiduciary responsibility to ensure that it receives all the information necessary to determine that this transfer does not cause any detriment to the security of this port or to the bi-state region. Among other things, the PA has a fiduciary responsibility to ensure that the proposed change in PNCT's beneficial ownership, from a shipping operator to a financial investment company, has no adverse impact on future capital investments made in the terminal or on container throughput.

Furthermore, the PA believes, based on information gleaned from public sources, that Dubai Ports will generate at least $450 million of proceeds on the sale of PNCT, based on a total investment of approximately $140 million. This represents an annualized rate of return of more than 40%. This extraordinary windfall was greatly supported by capital expenditures by the PA into the terminal. The PA's expenditures of public funds were made to increase capacity of the terminal and thereby directly enhanced the value that Dubai Ports will receive upon a sale of PNCT.

The PA's request that its capital expenditures be recovered out of Dubai Ports's extraordinary gains is intended to ensure the continuing strength and viability of regional port facilities. Recovery of expenditures would be reinvested in the port facilities to ensure the continued competitiveness of the New York and New Jersey Port system and this will in turn inure to the benefit of present and future port operators, and ultimately the citizens of New York and New Jersey.

We are prepared to meet to continue negotiations starting at 9:00 a.m. Friday, February 16, 2007 in Port Authority offices.

Sincerely,

R.M. Larrabee
Director
Port Commerce Department

cc: Hon. Anthony R. Coscia, Chairman, PANYNJ
Anthony E. Shorris, Executive Director, PANYNJ
James P. Fox, Deputy Executive Director, PANYNJ

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