Tranz Rail accused of keeping secrets

By ELLEN READ

Complaints that Tranz Rail withheld information from investors are being investigated by the Stock Exchange's Market Surveillance Panel.

The panel has received two complaints - one from an individual and the other from the Shareholders Association - alleging that the rail operator failed to provide the market on a timely basis with relevant information known to its directors and former major shareholders.

The complaints, filed at the end of last month, have also been referred to the Securities Commission to see whether the company complied with stock exchange listing rules.

The panel's acting secretary, Elaine Campbell, was unable to identify what the complaints related to, saying that if they were not upheld it would be unfair on Tranz Rail to have it made public.

Campbell said the panel was seeking a meeting with Tranz Rail.

She said compliance with Listing Rule 10.11 was the one under investigation, and said possible penalties were set out in Listing Rule 5.4.2.

These include punishments such as a published censure, suspension of trade and referral to statutory or government bodies.

Tranz Rail spokesperson Alan McDonald would not discuss the matter, except to say the company was confident there was no basis to the complaints but would do what was necessary to resolve the matter.

The company's share registry shows that Wisconsin Central, now under Canadian ownership, sold its 23.7 per cent stake for $3.70 a share and Fay Richwhite sold its 14.5 per cent stake for $3.60 a share in February.

Since then, Tranz Rail has had a run of bad news and share price drops, culminating last month when the company took the unusual step of making a special briefing to the market about the state of its books in an effort to stabilise the share price, which had fallen to all-time lows.

The company said it would record writedowns amounting to about $170 million in the current year. Tranz Rail also said it expected to post a $26 million net profit this year and an operating profit of $55.8 million next year.