Tranz Rail today confirmed it had completed the lease buyout of the Interisland ferry Aratere and now had full ownership of it.
The rail company secured an option to buy out the lease in May after negotiations with United States-based parties to the lease.
Australian logistics company and Tranz Rail suitor Toll
Holdings lent the rail operator $77 million to buy out the lease.
Tranz Rail chairman Wayne Walden has said the debt facility with Toll was more favourable for the company than arrangements under the lease.
Tranz Rail would receive various benefits from the buyout, including reducing its foreign exchange risk, freeing up security and releasing a US$15.5 million cash deposit held in the US.
In June, Tranz Rail said the lease buyout plan could free up $30 million in cash and allow it to realise a $10 million foreign exchange gain.
Tranz Rail sold the ferry to US-based Wilmington Trust in 1998 for US$55 million ($93.56 million) and leased it back, using the money to pay off debt.
However, relations with the financiers turned sour and when Tranz Rail's credit rating was downgraded to junk status by Standard & Poor's last September, it triggered a crisis.
Under the contract, Tranz Rail was obliged either to provide a letter of credit for $115 million or to buy the ferry back at a price estimated to be $50 million above its market value, neither of which it was in a position to do.
Yesterday, Tranz Rail said it had forecasted an operating profit of $48 million, before tax and unusual items, for the 2004 financial year.
At 10.40am, Tranz Rail shares were unchanged on $108, having traded between 30 cents and $1.67 this year.
- NZPA
