Toll gives brokers incentive to sell into Tranz Rail offer

By PAM GRAHAM

Toll Holdings yesterday offered an incentive to stockbrokers to rustle up acceptances for its bid for Tranz Rail.

If shareholders accept the takeover offer through a broker, the broker gets a 1 per cent handling fee. The fee encourages brokers to work client bases to round up accepting shareholders.

It is capped at $750 for a single acceptance and open until July 8.

Such fees during a takeover are more common in Australia but are not unknown in New Zealand.

Tranz Rail has said shareholders should wait for an independent report and recommendation from directors on July 7.

Some institutional shareholders, disgruntled with the latest revisions to profit forecasts, decided not to wait and last week sold enough shares to Toll to give it just under 20 per cent of the company. Purchases beyond that have to be through its offer to all shareholders.

The July 8 date is important because it is Toll's deadline for altering conditions or extending its highly conditional offer.

Toll managing director Paul Little has said the offer will not be extended beyond July 23.

The company's bid is competing with a Government plan to buy back the rail network and inject new capital into Tranz Rail by buying new shares. That plan does not go to a shareholder vote until July 31.

Brokers said Tranz Rail's shareholder base has been influenced by the takeover and it was difficult to say how much was now owned by hedge funds.

The shareholder base was about half retail and half institutional before Toll bid.

The Rail Freight Action Group, a lobby group of major customers, yesterday encouraged Tranz Rail shareholders, including Toll, to vote for the Government plan because it included a commitment of $100 million over five years to improve the rail network.

The group estimates $300 million needs to be spent.

It said its members could double the amount of freight on rail in the next five years if the Government's restructuring plan went ahead.