Toll wants checks on Tranz Rail

By PAM GRAHAM

Toll Holdings has made verification of Tranz Rail's interim and third-quarter accounts and an investor briefing on April 9 conditions of its takeover bid.

The Melbourne-based company has also made its bid conditional on no liquidator, receiver or statutory manager being appointed, no change in existing banking or funding arrangements and no adverse change in the regulatory environment.

Toll's bid is for 75c cash a share, the same price RailAmerica offered before withdrawing. Tranz Rail shares closed at 80c yesterday.

Toll's notice of takeover released late yesterday had no dates in it. Companies dispatch takeovers between 14 and 30 days after a notice is given and offers typically remain open for 30 days.

The company said it expected to send the offer by the end of this month and that it had started talks with Tranz Rail about support for its offer and about how to "assist Tranz Rail with its short-term challenges."

Those challenges culminate this month. According to court documents Tranz Rail will have $1.3 million of cash and fully drawn bank facilities at June 30 even if it makes a $10.7 million asset sale.

Without a sale it requires the support of bankers.

The Herald understands a large rolling stock lease payment is due around June 19.

Tranz Rail said yesterday that it would communicate with shareholders after seeking an external valuation of the Toll offer and advice. "Our key focus is looking after the best interest of the company and shareholders," said chairman Wayne Walden.

Toll managing director Paul Little said Tranz Rail would have to disclose "their view of life" with respect to commitments due.

Toll, which has a 10.1 per cent holding in Tranz Rail, has made its bid conditional on majority control, whereas RailAmerica's bid was conditional on 90 per cent acceptance.

The Toll bid is conditional on Tranz Rail's target statement including a statement that the third-quarter accounts released on May 2 were accurate.

Toll wants a similar verification of forecasts of earnings before and after abnormal items and capital expenditure up to 2005 in an investor presentation on April 9 and the accounts for the six months to December 31.





Toll will bid for TranzLink, Tranz Rail's road transport business, if that sale goes ahead, Little said.

Owens Group managing director David Ritchie said as far as he was aware the TranzLink sale was proceeding and final bids were due in about 10 days.

Toll executives met Government officials on Tuesday after Tranz Rail's major customers had again called on the Government to buy the track back.

"The Government, I don't believe, are able to, or are indicating an intention of, getting involved in the transaction," Little said.

The bid:

* Toll Holdings is offering 75c a share for Tranz Rail, valuing the company at $158 million

* Tranz Rail shares closed yesterday at 80c

* Toll's bid is conditional on the accuracy of Tranz Rail's accounts and on no changes to existing banking or funding arrangements

* Toll already owns 10.1 per cent of Tranz Rail