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DHL defaulted on payment... hurt company financials.

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analogdog   Saturday, 11/10/07 12:17:30 PM
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DHL defaulted on payment... hurt company financials.

ABX warns of credit default on DHL payment dispute
Friday November 9, 12:17 pm ET

(Reuters) - Air cargo services provider ABX Air Inc (NasdaqGM:ABXA - News) on Friday warned of a credit default as it seeks to resolve a dispute with a major customer regarding reimbursement of fuel expenses and other costs, sending its shares to a three-and-a-half-year low.

The company claimed that DHL had withheld certain payments under two commercial agreements.

ABX, which is DHL's principal business partner in the U.S., provides them with air cargo transportation services under their aircraft, crew, maintenance and insurance (ACMI) agreement.

It also provides staff for package sorting, warehousing, logistics and equipment maintenance services under their Hub services agreement.

The dispute relates to reimbursement of fuel expenses withheld by DHL as ABX's revenue from other customers exceeded a 10 percent threshold, the company said in a statement.

However, ABX contends that DHL has improperly excluded certain fuel expenses reimbursements incurred on its behalf.

DHL also claims that ABX's costs in maintaining its public company status and certain professional fees incurred by the company due to an unsolicited bid by its competitor are not recoverable under the agreements, ABX added.

In June, Astar Air Cargo had made an unsolicited bid to buy ABX for $7.75 per share in cash. However, Astar later withdrew the offer as ABX had decided not to proceed with the deal.

ABX said it is now reviewing its options while continuing to maintain full service to DHL.

Shares of the Wilmington, Ohio-based lost more than a third of their value, and were trading down $2.o4 at $3.69 in afternoon trade on the Nasdaq.

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