Rearguard actions spoil Toll's takeover party

By PAM GRAHAM

Control of Tranz Rail passed to Australian company Toll Holdings yesterday but a battle for 100 per cent ownership goes on.

Toll managing director Paul Little removed conditions on the bid about 5pm on the expectation that he would have 85 per cent of the company's shares by day's end, up from the 82 per cent disclosed to the market during the afternoon.

The move followed arguments with two New Zealand institutions which are expected to continue trying to frustrate his attempts to get to the 90 per cent trigger for compulsory acquisition and a sharemarket delisting.

Toll had no parties planned last night to celebrate what Little said was "by far the hardest transaction I've ever done".

Toll will use a provision in the Takeovers Code to extend the offer for 30 days, and up to 60 days if necessary, to try to get to 90 per cent.

The two funds that did not accept are understood to be holding out for a higher price and they may try to bid Tranz Rail shares up onmarket, forcing managers of passive funds to sell to them when Tranz Rail drops out of the index. Tranz Rail shares continued to trade fairly actively on the market at $1.10 yesterday.

"I asked them [the funds] this afternoon what have they been trying to achieve and they've found it difficult to explain," said Little.

"I told them it won't stop us. And it won't. We will get to the 90 per cent."

He declined to name the funds.

The conversation was understood by others to have been heated.

An interim board was now likely to be appointed and the integration plans Toll was preparing to execute from Monday were being stripped back.

"We have to have full control before we can start to flex our own balance sheet, order equipment and change things around," Little said. He said the delay was frustrating.

Adviser Deutsche Bank worked the share register to the last minute and may yet deliver the 90 per cent to Toll, depending on what overseas funds do.

The takeover went to the wire and the Government, which had two press statements prepared, ended up pushing the button on the one welcoming Toll.

The track buyback agreement is now activated. The Government buys the 3807km rail network, with 149 tunnels and 2178 bridges, for $1 and other assets for about $50 million and has agreed to invest $200 million over five years. Toll will invest $100 million in rolling stock.

Toll has tapped David Jackson as chief executive and Austin Perrin as chief financial officer from within its Australian ranks to run the road and rail business in New Zealand.

The ferry operation will report through to Toll's shipping business in Melbourne.

About 2960 Tranz Rail employees with an average length of service of just over 20 years and an average age of around 40 will be affected by the takeover.