Rail bidder 'in for long haul'

By PAM GRAHAM

Gary Marino, chairman, president and chief executive of RailAmerica, came to Auckland yesterday to say he was not "here to make a quick buck" from Tranz Rail.

If his company's 75c-a-share cash bid for all of Tranz Rail is successful, the New Zealand rail operator will become the 50th railway in a global portfolio built up by Marino inside 20 years.

The 58-year-old is a Republican and former US Army first lieutenant, according to Bloomberg data. His Florida-based company sponsors a campaign to help students write to troops in Iraq.

Marino said people thought he was crazy when he started RailAmerica in 1986 with US$100,000 ($175,000) of his own money to buy the 134km Huron and Eastern Railway in Michigan.

RailAmerica went public in 1992 and now owns 49 short line and region railways, with 20,760km of track, in the United States, Canada, Australia and Chile.

The RailAmerica pitch for Tranz Rail is essentially that it is a long-term investor in, and efficient operator of railways. It believes in having control over the assets it manages, and in looking after customers, staff and investors.

Though Australia's RailAmerica chief, Marinus van Onselen, was not asked specifically if the company was against open access to rail, he said railways were a "single-dimensional space" that should be tightly controlled by operators.

He will meet Finance Minister Michael Cullen on Tuesday.

RailAmerica said it would transform Tranz Rail into the company "it could be and should be".

Though a RailAmerica executive said last month that the company had no interest in a Tranz Rail bid, RailAmerica has been following the New Zealand operator for some time.

It has previously made a conditional bid for Tranz Rail but a final bid did not eventuate, according to court documents from Tranz Rail's failed attempt to muzzle credit rating agency Standard & Poor's.

RailAmerica was one of four parties to express an interest in acquiring all the shares in Tranz Rail after Pacific Rail and Wisconsin Rail engaged Deutsche Bank in November 2000 to sell their shareholdings, the documents show.

Yesterday, RailAmerica would not say how much it had been prepared to pay then, but the shares were trading above $3 in early 2001.

RailAmerica has a market capitalisation of US$248 million and reported bottomline profit of US$4.3 million in the March quarter.

The company was knocked by the drought in Australia and higher fuel costs and has been cutting costs.

It said a year ago that it would sell more than US$100 million of non-core assets, including an investment in Chile, by the end of next year as part of a plan to reduce debt and improve operating margins.

Van Onselen, the head of Freight Australia, said he would live in Auckland to run Tranz Rail initially.

RailAmerica bought the V/Line railway from the Victoria Government in 1999 and renamed it Freight Australia in 2000 when it started picking up national contracts.

Van Onselen said he had worked in the trucking and shipping industries, and Freight Australia had been successful in enticing road freight to rail and increasing revenue.

"I'm a very hands-on person. I don't believe in virtual anything.

"I have a great belief in rail as the sleeping giant the world is going to rediscover."

Van Onselen said that when he met Cullen, "I'm going to listen to the Government to see what they are going to say to me".

He could not promise that RailAmerica would not close lines.

"If there are solutions other than closure I would like to talk to others."

Van Onselen said he had no plans to break up Tranz Rail and did not have a problem with passenger businesses.

"The road industry has been able to swamp the rail industry in New Zealand and around the world," he said.

"Rail has to be a viable business."