By PAM GRAHAM
Tranz Rail yesterday announced details of a $66 million rights issue and tweaked its annual earnings forecast lower.B Its shares fell 11 per cent to a record low of $1.22.
Shareholders can buy five new shares at 75c each for every seven held. They can trade rights from
November 25. The offer closes on December 13 and the new shares begin trading on December 16.
ABN Amro Rothschild is underwriting the issue.
"As things stand we have every intention of taking up our entitlement," said Wayne Stechman, NZ equities manager at Tower Asset Management. "Given we were shareholders at $1.30, we'd certainly want to be shareholders at 75c."
Tranz Rail said rights issue costs and higher insurance charges led it to cut its forecast for earnings before interest and tax to $53.1 million from $55.8 million.
Half of the money from the rights issue will be used to repay bank debt and half to support a letter of credit to the leaseholders of the Aratere ferry. Proceeds of asset sales will be used the same way.
The rights issue increases the number of shares trading on the Stock Exchange to 209 million from 121.7 million.
