Trading watchdog has eye on Toll

By PAM GRAHAM

Insider trading regulator the Securities Commission said it was looking into trading in Tranz Rail shares by Australian company Toll Holdings.

Melbourne-based Toll amassed a 10.1 per cent holding in Tranz Rail last week and did due diligence on the railway company's logistics and trucking division, TranzLink, last week.

Some companies in the TranzLink sale process agreed not to trade in Tranz Rail shares. Mainfreight was one, said managing director Don Braid.

Toll did not make such an undertaking, said Tranz Rail chief financial officer John Loughlin.

"Toll Holdings have not received from Tranz Rail any material price-sensitive information which has not been disclosed to the market generally," Tranz Rail said in a statement to the stock exchange yesterday.

"The matter has been referred to the Securities Commission and we are looking into it," director of enforcement Norman Miller said.

Toll bought shares and declared a 6.1 per cent stake in Tranz Rail after Florida-based RailAmerica announced an intention to offer 75c a share for Tranz Rail.

It moved to a 10.1 per cent stake, which prevents compulsory acquisition by anyone else, after RailAmerica withdrew its notice of intention to bid.

Tranz Rail shares rose 5c to 83c yesterday on hopes that Toll would bid for all of the company.

The shares have traded in a wide range between 30c and 99c in the last six weeks. Toll was keen to take over Tranz Rail but needed to find out more about Government policy and where the TranzLink sale stood, said Toll managing director Paul Little.

Executives had a brief meeting with Government officials last week and Transport Minister Paul Swain had a short introductory meeting with Mark Rowsthorn, the company's executive director of operations, while in Melbourne last Friday.

Little said the boards of Toll and Pacific National, its rail joint venture with Australian transport company Patrick Corp, were meeting this week.

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

Tranz Rail's major customers want the Government to buy the track back and Tranz Rail has discussed the issue with the Government.

"We don't own the track, or have exclusive rights to the track in Australia," said Little.

"But in New Zealand, the market is a lot smaller and our view is that we have got a lot more interest in exclusivity of the track than we do in owning the track.

"We need to try to understand where the Government [is] in relation to that."