KEY POINTS:
Haggling over the details of the government buyback of Toll Holdings' rail business in New Zealand will go right to the wire today.
The deadline is midnight today and late yesterday agreement on all aspects of the deal had not been reached.
Plans are in place for a
big revelation of the new look of the business at Wellington's railway station on Tuesday.
In May the Government and Toll announced a heads of agreement for the government to buy Toll's rail and ferry assets for $665m. There are another $25m of associated costs.
The heads of agreement, which had to be announced because Toll is a listed company, sets out principles but there was still a lot of negotiating to do on the detail.
- NZPA understands that negotiaters were working hard in the offices of lawn firm Russell McVeagh at the weekend and that the talks are set to go on right up to the deadline.
It was minutes before midnight when a government official finally handed over a small coin when the track was repurchased for $1 after a tense negotiation.
There will be no announcements from the Government until the negotiations are concluded.
The Government has not confirmed speculation that former National Party prime minister Jim Bolger will be chairman of the new rail operator.
Rail Corp is understood to be the working name of the business in documents but not its final name. A new paint job on locomotives is believed to drop the green and gold Australian look and include black but not on the front and back for rail safety reasons.
The road transport industry is concerned that Toll's ongoing trucking business Toll Tranzlink will enjoy cheap rents on leased rail land and cheap rail charges going forward.
The refinancing of the rail company's debt will also be an issue as the company benefitted from the parent Toll's credit rating. Debt will be assumed in the transaction as is normal in a takeover.
Railfreight is most likely to have a future on long haul routes and when successfully connecting to ports. Passenger services in cities and tourist routes are also seen as core areas.
"Rail has been a commercial failure," a report on the port sector by Rockport Corporate Finance Ltd said this month.
The report said that long suffering tax payers may be surprised at the scale of a subsidy needed from government.
The buyback of the rail business by the Crown comes at a time Australian state of Tasmania struggles to retain a viable rail business.
Issues affecting rail in New Zealand going forward include:
* the cost of fixing up the track and buying new locomotives and rolling stock to increase efficiency;
* The relationship between track owner Ontrack and the rail operator under government ownership;
* Whether capital expenditure will include the building of a new line to Fonterra's Clandeboye plant in Temuka, a line to Northland Port or sidings at Wiri for Ports of Auckland;
* The company has to this year buy back 15 per cent of its rolling stock previously sold and leased back by Tranz Rail.
* How the company satisfies major customers like Solid Energy and Fonterra.
* How the company will be affected by a proposed law allowing heavier trucks and a revival in coastal shipping.
- NZPA
