Toll asked to sweeten share offer

By PAM GRAHAM

Tranz Rail's big shareholders want Toll Holdings to raise its bid from 95c a share to as much as $1.30 a share.

They claim Toll is getting all the benefit of the $250 million track buyback deal struck with the Government this week and that they can no longer go along for the ride, because Toll wants to buy all of Tranz Rail.

It is, as one shareholder put it, a case of who blinks first.

The stakes are high because documents released this week reveal that Tranz Rail's bankers can call in loans if the Crown's first buyback deal fails.

According to Grant Samuel, Tranz Rail's $83 million bank facility agreed in December included a $26 million pledge of $30 million worth of outstanding debtors to lenders.

The new track buyback deal between Toll and the Government kicks in only if Toll gets total control.

"Our shareholding is not for sale at 95c," said Simon Botherway of Brook Asset Management.

Brook, which owns between 2 per cent and 5 per cent, wanted to be a minority shareholder in a company 50 per cent controlled by Toll.

"They have struck a deal that is significantly more advantageous to them as operator than the existing Government proposal with the company. We would expect to participate in some of the upside."

Toll has to make a new offer at 95c incorporating the Government plan, so that a new six-week takeover process is triggered.

Tranz Rail had no comment yesterday although insiders are said to be angry that the Government has struck a better deal with Toll, one that delivers $200 million in infrastructure spending over five years compared with the first deal that promised $100 million and an implied $20 million a year in subsidy in track access fees.

The Government is not releasing a valuation for the second track buyback deal. First NZ Capital, the Government's advisers, had valued the first deal as equal to $1.30 a share.

Grant Samuel put it lower at between 97c and $1.03. It valued the shares at between 67c and 86c and found Toll's first 95c offer to be fair.

Tranz Rail's directors recommended Toll's first 95c share offer provided Toll removed its conditions.