Hints that US firm is eyeing Tranz Rail

By PAM GRAHAM

United States railroad company Genesee & Wyoming is expected to unveil a bid for Tranz Rail next week.

Trading in Tranz Rail shares came alive yesterday, with at least three brokers bidding them up from 91c to 96c. A total of 4.3 million shares traded, more than four times the daily volume earlier in the week.

"We're back on. It looks like a new player building up a stake," Direct Broking's Brett Wilkinson said.

Nigel Scott at ABN Amro Craigs said there was something happening "but we don't know what it is".

The Herald understands the US short-haul rail operator is planning a bid to rival that of Toll Holdings.

The new offer is expected to proceed without any arrangements being put into place with the Government. Executives from the US company were here two weeks ago.

Genesee & Wyoming declined to comment when asked if it had any expansion plans in New Zealand.

The company has a market capitalisation of US$313 million ($527 million) and specialises in short-haul railways. It operates lines in the US, Canada, Mexico, Australia and Bolivia.

About 44 per cent of its net profit comes from Australia, where it has a joint venture with Wesfarmers called Australian Railroad Group.

It has rail assets in both Western Australia and South Australia.

The firm specialises in turning around unprofitable railways, and buying railroads from Governments.

It is acquisition-driven and its website says that it aims to increase revenue, cut costs and improve utilisation of assets.

Toll Holdings owns just under 20 per cent of Tranz Rail and is offering 95c a share.

An independent report and a directors' recommendation on its bid is due on Monday. Toll is competing with a Government plan to buy the track back and take a 35 per cent stake in Tranz Rail.

additional reporting: Ellen Read


Genesee & Wyoming:

Based: Connecticut, USA.

Market value:US$313 million ($526.5m).

Chair and CEO: Mortimer B. Fuller III.

Core business: freight.

Owns 20 railways in five countries: United States, Canada, Mexico, Bolivia and Australia.

Owns or leases 8000 miles of track.