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Jafza was asked to consider CaroLinks purchase
By Dan McCue
Staff Writer
When CaroLinks CEO Lucy Duncan-Scheman made her first trip to Dubai last February, she was offering more than just land options in Orangeburg. Duncan-Scheman has revealed she was also ready to sell all or part of the company she founded in 2005.
“When we began, we permitted Dubai to study all alternatives,” said Duncan-Scheman, who brokered the deal for 1,300 acres of land. “Then we negotiated a deal.”
Until now, the back story of the deal that could bring up to 10,000 jobs to South Carolina has been a mystery, mostly because many of its details are covered by a confidentiality agreement between CaroLinks and Dubai-based Jafza International.
Chuck Heath, Jafza’s senior vice president and managing director, declined to comment on the making of the deal, citing that non-disclosure, non-disparagement agreement.
“She did approach us, and she deserves a lot of credit for aggregating the options to form a large, contiguous tract of land,” he said, willing to reiterate only what is already public.
But in a series of e-mails and telephone conversations, Duncan-Scheman and her husband Ron Scheman laid out much of the tale.
From the date of its formation in 2005, CaroLinks had an idea and several investors, but it lacked a strategic partner that would be able to pull together the equity to make its proposed inland port and intermodal network a reality.
Initially, that partner was supposed to be a publicly traded company that could not be identified because it was then in a “quiet period” mandated by the U.S. Securities and Exchange Commission. Later, CaroLinks entered into prolonged discussions with Barclays Bank.
But from the third quarter of 2006, Dubai and another group, Temasek Holdings of Singapore, rose to the top of Duncan-Scheman’s short list of potential strategic investors.
“Late in 2006, Alan Capper (CaroLinks’ senior vice president for communications) and I were introduced by friends of CaroLinks in Washington to very senior-level representatives in D.C. at the time from Dubai World,” Duncan-Scheman said.
That introduction led to an introduction in Charlotte, N.C., to Michael Moore, head of Dubai World’s DP Ports division.
Moore told Duncan-Scheman that CaroLinks and DP Ports weren’t a good fit at the time because the Dubai company was in the process of liquidating its American assets in the wake of the political controversy surrounding its acquisition of the British Peninsular and Oriental Steam Navigation Co.
British Peninsular operated several U.S. port terminals at the time, and, despite Bush administration approval of the ownership, several powerful members of Congress opposed Dubai’s U.S. port holdings.
More important, Moore said, DP World did not do inland ports. That’s when Duncan-Scheman was invited to attend the Desert Golf Classic in Dubai in late January 2007 and was introduced to the principals of Jafza International.
“Until then, Lucy had never heard of Jafza,” said Ron Scheman. “But from that point forward she worked like the dickens to see that a deal got done.”
At the time, unbeknownst to Duncan-Scheman, Jafza International was looking at investment opportunities in North America, with an eye toward the southeastern United States because of trends in shipping and cargo movement.
Duncan-Scheman said she offered Jafza International three options: Buy the company; buy a significant interest in it; or buy the land.
Intrigued, Heath himself visited South Carolina in April and had his first discussions with Jim Roquemore and other owners of the Orangeburg site.
He also enlisted KPMG, a global network of professional firms providing audit, tax and advisory services, to look at CaroLinks’ books, and London-based LCP Consulting Ltd., a leading logistics and supply-chain specialist, to look at the viability of the Orangeburg property.
In June, Duncan-Scheman again boarded an 18-hour flight to the United Arab Emirates and, after waiting six days in a Dubai hotel room, finally received Jafza’s answer: It wasn’t interested in the company, but it would make a deal for the land.
The two companies quickly agreed to establish a special-purpose vehicle solely to facilitate the options acquisition.
Even then, according to Ron Scheman, the land deal was slow to come to fruition.
“In my legal opinion, Jafza’s attorneys unduly complicated the deal and were causing interminable delays,” he said.
Scheman said of most concern at that point was an option that was soon to expire on a piece of the site called the Collins tract. Scheman said he considered that specific property the linchpin of the deal.
“Whoever controlled that, controlled the whole show,” he said.
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@setcommedia.com.
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