Stagecoach out of trains deal

By PAM GRAHAM

Stagecoach walked from the sale process of Wellington commuter rail services yesterday, firing a shot at Tranz Rail as it went.

But the Scottish company that carries 60 million passengers a year in New Zealand said it was still interested in running a rail service in Wellington "under the right model".

Stagecoach executive chairman Ross Martin said Tranz Rail wanted to retain control of track maintenance, network management, train control, signals, communications and driver standards.

Stagecoach, which would integrate trains with the buses it already operated in Wellington, said it needed control of those areas to do the job properly.

The sale process, which is being handled by Cameron & Co, is complicated because buyers have to negotiate separately with the Wellington Regional Council for subsidies.

The council was in a joint venture with Stagecoach to bid for the Tranz Rail assets but that ended in a separate argument over the sale process.

Martin said the joint venture was "parked up".

Tranz Rail is under pressure from investors to sell assets or close uneconomic lines. It is also facing a downgrade from Standard & Poor's and developments are possible soon.

The company's share price fell this week amid speculation that one fund was selling down a stake.

Tranz Rail was on the front foot, though, with a statement that it had signed a heads of agreement with Port Otago to promote the use of rail at the port, which is a big handler of meat exports.

The port has bought Tranz Rail's Dunedin Box business, which maintains and checks refrigerated containers, for an undisclosed sum.

The port will relocate its Dunedin container site to Tranz Rail's Strathallan St site.

Port Otago chief executive Rene Bakx said there was scope for using rail more between Dunedin and the port. "Tranz Rail has proven to us that they can offer a reliable on-time service and that is why we are more than happy to do business with them."

Tranz Rail shares closed unchanged at 94c yesterday.

They had fallen as low as 90c on Wednesday but remain above the 75c price a rights issue was carried out at last year.