Australia's Toll sees improved cost savings ahead

MELBOURNE - Australia's Toll Holdings says cost savings from its A$6.3 ($7.87) billion acquisition of ports operator Patrick Corp. Ltd. would top its earlier forecasts and be delivered at a faster pace.

Toll Managing Director Paul Little said cost savings would exceed A$65 million, but declined to say if they could reach the A$150 million forecast by some analysts.

"I think we will exceed the 65, and we will probably get there quicker than the three years we had originally set ourselves," he told Australian Broadcasting Corp. television.

Toll became Australia's biggest transport group in May when it won control of Patrick. Under the original takeover offer launched last August, Toll had planned to sell Patrick's stake in airline Virgin Blue Holdings Ltd., but it has since ruled out a sale in the short term.

"Insofar as our long-term interest in that asset, we haven't made that decision yet, but my view is that it will be made before the end of the calendar year," Little said.

UK entrepreneur Richard Branson's Virgin Group Ltd. which owns 25.6 per cent of Virgin Blue, had expected to increase its stake under the original offer to as much as 40.6 per cent.

Little said he was in favour of government plans for a new north-south rail link between Brisbane in Queensland state and Melbourne in Victoria state.

But he said it was likely private enterprise would need to contribute in some way to allow sufficient funds to be raised for the A$4 billion-to-A$5 billion link to be built.

"From our point of view we put a very small percentage of our east coast freight on rail at the moment, probably less than 20 per cent," he said.

"We would certainly like to see closer to 50 per cent of our freight movements between Melbourne and Brisbane on rail, and this is one way we could achieve that."

- REUTERS