Shareholders push Tranz Rail to stop asset sale

By PAM GRAHAM

Shareholders are putting pressure on Tranz Rail to abort the sale of trucking business TranzLink because they fear Toll Holdings will walk away from its takeover bid.

Chairman Wayne Walden said yesterday that Tranz Rail had received two bids for TranzLink which would be considered by the board this week.

Owens Group and Toll Holdings have both said they put in bids last Monday, but Toll's bid was under protest because it has given notice of a 95c a share bid for all of Tranz Rail.

Its full bid is conditional on no asset sales, and is in competition with a Government plan to buy the track back and invest in the operating company.

Walden said Toll had sought to stop the TranzLink sale but the Takeovers Panel had ruled there was insufficient evidence that the sale would frustrate Toll's bid for all of the company.

National Party associate transport spokesman John Key said he had a copy of a letter from an institutional shareholder sent to Tranz Rail yesterday warning directors they could face legal action if they wilfully breached any conditions of the Toll offer.

Tranz Rail confirmed it had received letters from shareholders but would not discuss their contents.

Alliance Capital and Brook Asset Management, Tower Asset Management, and AMP Henderson are the largest institutional shareholders. Investment company Infratil owns 7 per cent.

Wayne Stechman of Tower said he had not written to the company but had told directors there was no reason to sell TranzLink immediately and he would prefer the sale to be put off. Simon Botherway of Brook Asset Management declined comment and others were not available.

Key said institutions were telling him they had no faith in Tranz Rail's management and would support the Toll offer over the Government package. The Government should get around the table with Toll to avoid squandering taxpayers' money, he said.

"The Government is playing chicken with Toll and they are going to get run over by a locomotive."

Toll managing director Paul Little was not getting such clear signals from institutions.

"Most of them have said they might be, not would be, prepared to sell into the Toll proposal as it is currently drafted but they certainly would not be selling in all of their share holding."

Meanwhile, Toll and the Government remained on separate tracks. "There is no attempt to try and replace our processes with a third agreement that is going to be generated between the Government and Toll," said Little.

"I would not rule it out but ... the focus for both groups is continuing on their processes but at the same time time to develop a better relationship with each other."

He said a TranzLink sale might have a significant impact on Toll's willingness to move forward.

A downpayment on the Government package has reduced the need for Tranz Rail to sell assets to meet looming lease payments.

But Walden said the company's asset sale programme was important for the company and shareholders.

The Takeovers Panel received a complaint from Toll last Friday arguing that proceeding with the sale of TranzLink was in breach of rule 38 of the Takeovers Code. The panel sought comment from Tranz Rail and found there was insufficient evidence to take it further.