Tranz Rail chugs through meeting

By SIMON HENDERY

Tranz Rail may have had a far from mundane year, but the company's new-look Toll Holdings-dominated board yesterday chugged its way through an uneventful annual meeting.

About 30 shareholders turned out to the Auckland meeting to hear a wide-ranging address from chairman Mark Rowsthorn, and observe the formalities of the re-election of four board members.

The past financial year had been disappointing, Rowsthorn said, because the company had again failed to live up to expectations.

In the year to June 30 Tranz Rail recorded a $2.6 million after-tax loss, compared with a loss of $122.8 million the year before. Group revenue was $610 million for the year, down 9 per cent.

At the end of the financial year, total debt was $280 million.

Since balance date, the company has restructured its finances by exercising an early buyout option on the leased Aratere ferry using a $77 million loan from Toll.

Tranz Rail has also repaid a $44 million Government loan and received funding for working capital through a $50 million Toll loan.

Rowsthorn announced yesterday that the board had approved a third, $55 million, loan from Toll, to be used to repay bank debt and provide additional working capital.

"The loans from Toll - which have been provided on a commercial arm's-length basis - have also in the short term eased the company's tight liquidity situation," Rowsthorn told the meeting.

"The company is currently exploring a range of alternatives, most of which are likely to require shareholder support, in order to meet the debt repayments as they fall due [over the next two years]."

Given the company's financial situation, it was not expecting to pay shareholders a dividend "in the foreseeable future".

Rowsthorn said trading results in the current financial year had been satisfactory, with revenue to date in line with expectations and slightly ahead of this time last year.

But rail-freight revenue had been hit by lower forestry exports due to the strengthening dollar. Rowsthorn said an accurate prediction of the company's full-year earnings was not possible because of a management review being done.

Toll-appointed chief executive David Jackson, who began in the job in October, did not address the meeting. He only fronted briefly to act as chairman while a vote was taken on Rowsthorn's re-election.

* The venue for yesterday's meeting - Takapuna's Spencer on Byron Hotel, not far from the company's Smales Farm headquarters - is in the heart of Auckland's train-free North Shore. But one shareholder, a farmer from south of Auckland, proudly told the board he had caught a train at least part of the way ... Tranz Rail's Wellington-to-Auckland Overlander service at Papakura. "The [regional] council wanted me to catch one of theirs but I said since I'm a shareholder I'll pay the extra money."