The Government has ruled out supporting the debt-ridden Kingston Flyer, a Southland tourism drawcard.
A statement from Prime Minister John Key's office said the iconic steam train's future was up to the mortgage company and its operators.
"While it is regrettable that the situation has reached this point, KAL [Kingston
Acquisitions] is just one of many companies that find themselves in this position in these challenging times," it said.
Questions about how the train's closure might damage tourism and Mr Key's national cycleway, which will pass through Kingston, were not answered, the Southland Times reported.
The 125-year-old Kingston Flyer should have resumed services last week but mounting debt and a failure to sell has left the train on a siding.
Kingston Acquisitions director Robbie Caldwell said he had fruitless talks with the Government and KiwiRail in June about buying back the train.
"They said it would create a precedent if they helped a private company in this environment," he said. "But... to help save a heritage item would not create a precedent."
Kingston Acquisitions, which owns the train and adjoining development land, owed about $4.7 million to Prudential Mortgage Nominees, which has blocked attempts to sell the train to a United States company, insisting on retrieving all its money, plus interest.
Kingston Flyer Steamtrain, which leased the train from Kingston Acquisitions, has had to relinquish its hire agreement.
- NZPA
