NZ stocks: Tranz Rail takeover deliberations will dominate quiet week

By ELLEN READ

With no scheduled events to define the week, stock market interest will centre on the future of Tranz Rail and whether the deal announced with the Government on Friday holds the answers for the troubled company.

Will the Government succeed in its offer, what does that mean for the Toll Holdings' bid, what do shareholders want and what will they approve?

Although many questions and issues will have to be debated, brokers were reluctant to comment until they had had time to assess the situation.

On Friday, the Government said it planned to buy a 35 per cent stake in the railway company for $75.8 million, in a deal which would see new shares issued to the Government at 67c each.

This puts the present takeover offer by Australian distribution company Toll Holdings at 75c a share in jeopardy.

The Government would also buy back the rail track, associated land lease, yards, terminals and control systems from Tranz Rail for just $1, and other land, property and leases surplus to Tranz Rail requirements for about $50 million, subject to final valuations.

Tranz Rail aside, the cupboard is bare.

"I'm actually quite stunned," Macquarie Equities Arthur Lim said when he realised how empty the week's diary is.

He explained that the market is in a lull between the March 31 balance date reporting and annual meeting season and the June 30 one.

"Basically we are waiting for the end of June for the next season of results and any other developments in the corporate market."

While the Air New Zealand/Qantas deal and the INL/Sky TV situation remain on the radar, further news on either is unlikely to be revealed this week, he said.

Luckily for local investors, the New Zealand market has taken guidance from overseas bourses recently, most of which appear to be settling down after a period of prolonged uncertainty.