Toll plans takeover offer for Tranz Rail at 75c per share

Australian transport operator Toll Holdings plans to make a full takeover offer for Tranz Rail at 75c per share, equal to former suitor RailAmerica's offer.

Toll said the offer values Tranz Rail at $158 million, according to a statement today.

Tranz Rail shares closed unchanged at 88c before the offer.

Tranz Rail was jilted at the altar last Friday when Florida-based RailAmerica withdrew its surprise offer made a week earlier. On the same day Toll increased its stake to 10.1 per cent.

RailAmerica's offer saw Tranz Rail's shares soar from 52c to 77c in one day.

Toll said it planned to serve a formal takeover notice, as required under the Takeovers Code, on Tranz Rail next week.

"Toll's decision follows completion of its own internal analysis of the Tranz Rail business, based on publicly available information, and follows Toll's initial acquisition of a 10.1 per cent stake in Tranz Rail," the company said.

Toll will assume Tranz Rail's existing debt and lease commitments, making the Australian company's offer similar to that from RailAmerica.

The proposed acquisition is to be fully funded by debt. It would be conditional on regulatory consents, a majority shareholder acceptance and Tranz Rail not disposing of any of its businesses or assets, entering any joint ventures or altering its existing debt or capital structure.

Tranz Rail said shortly after receiving RailAmerica's offer that it would continue with sales.

Tranz Rail is currently trying to sell off parts of its business, including wagons, the Wellington railway station, and its road transport business Tranz Link, to raise cash.

Toll managing director Paul Little said tonight he believed the proposed offer would be "highly" attractive to shareholders and customers, and reflected full and fair value.

"Tranz Rail's business operations and assets are good quality and provide a strong platform to create an efficient and competitive transport capability throughout New Zealand.

"We are excited by the opportunity to work closely with Tranz Rail's customers, the New Zealand Government and other stakeholders," Mr Little said.

Executives had a brief meeting with government officials last week and Transport Minister Paul Swain has met the company's executive director of operations.

Toll did due diligence on the railway company's logistics and trucking division, TranzLink, last week.

The New Zealand Stock Exchange said yesterday it believed Tranz Rail had not broken listing rules in its dealings with Toll, but the Securities Commission is investigating whether Toll received any price sensitive information.

Mr Little said the purchase would complement Toll's existing operations in New Zealand and was in line with the company's strategic growth aspirations for the region.

If successful, Toll will look at restructuring Tranz Rail's existing debt and lease commitments.

Toll has said it was the most logical vehicle for any takeover of Tranz Rail but there were assets that might be better off inside its subsidiary Pacific National, he said. Toll has placed its rail assets in Pacific National.

- NZPA