Toll stands firm despite share changes

By PAM GRAHAM

The market in Tranz Rail shares moved further against Toll Holdings yesterday but the Australian company will still not take the hint and raise its 95c a share bid.

New Zealand logistics company Mainfreight has turned up on Tranz Rail's share register and Toll refuses to comment on speculation that it may buy RailAmerica's rail assets in Australia.

Mainfreight has bought 1 million Tranz Rail shares, or about 0.5 per cent of the company, in the past two weeks.

"We've had a lot to say about the business so ourselves, along with a few interested individuals, thought we might have more of a say," said managing director Don Braid.

Mainfreight last week mailed a $49.2 million bid for rival Owens Group and had to get a waiver from seeking shareholder approval of large bids relative to a company's own size.

Toll is bidding 95c a share for full control of Tranz Rail and will sell the track to the Government if successful.

The price has been rejected by shareholders, an independent valuer and the Tranz Rail board mostly because it does not reflect the value of the track deal.

The Tranz Rail board met again yesterday. It is due to release audited full-year results by next Friday and has already released unaudited figures.

Tranz Rail shares rose as high as $1.01 yesterday when the market was disrupted by technical problems.

Toll managing director Paul Little acknowledged the price reinforced calls for a better bid but said: "We're struggling to find any more value."

Institutional shareholders had suggested Toll could make money by refinancing the lease on the Aratere ferry, so it could pay more for Tranz Rail, he said.

Tranz Rail has an option to exit the lease by the end of September but leaseholders can terminate the option on a change of ownership.

Effectively a lease exit would refinance the ferry, book $10 million of gains from a higher New Zealand dollar and release US$30 million of security held against it.

"My view is the complexities with the lease are so difficult to work through that it is certainly not a home run," said Little.

Little's view was also that rival Genesse & Wyoming "has gone", but that Toll was not gaining any benefit from that.

Toll's choice was to do nothing, enhance the bid or walk away. "At this stage, we're not changing anything," he said.

"By the end of next week, my view is that this [bid] will have either received significant momentum, or it will be going nowhere."

Yesterday Toll could not put a figure on acceptances.