Sharechat Logo

KiwiRail loses land in restructure, wipes $6.7B from assets

Wednesday 27th June 2012

Text too small?

KiwiRail is to be restructured, with its land holdings shifted to another entity, resulting in a write-down of some $6.7 billion and allow the state-owned railroad to produce better returns.

KiwiRail has gained government approval to pour its rail and ferry operating assets into a SOE while Crown land held for rail purposes will be held by NZ Railways Corp. This will result in the commercial arm of KiwiRail carrying assets of between $1.1 billion and $1.3 billion, down from about $7.8 billion currently, chairman John Spencer said in a statement.

The proposal was first flagged at the railroad’s annual meeting in November.

“This is a much more realistic valuation of the company’s assets, which will greatly assist KiwiRail in meeting its commercial objectives and provide more discipline in driving improved performance,” Spencer said. The changes mean the carrying value of KiwiRail’s assets reflect “the revenue they generate.”

Railways Corp has revaluation reserves of about $5 billion, ‘which would be written off first as a result of a writedown in the assets’ value,” KiwiRail said. “Any writedown in excess of $5 billion would affect NZRC’s bottom line.”

The writedown in the value of KiwiRail’s assets would be taken in the current year ending June 30, with the final amount to be determined after independent valuations.

The composition of the new boards of the KiwiRail SOE and NZRC haven’t yet been decided though they are likely to include “a majority of common directors,” it said.

In February, KiwiRail said full-year earnings would miss the target in its statement of corporate intent of $139.5 million on an ebitda basis. Earnings were expected to be in the range of $105 million to $115 million, though that was before any writedown.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar eases on increasing US-China doubts, lack of news in Fed minutes
From dog tucker to top dog: economists ask how Northport can be Auckland’s best replacement
MARKET CLOSE: NZ shares rise; Metlife jumps on takeover talk
NZ dollar eases on technical factors, buoyed by higher dairy prices
RBNZ eyes Westpac Australia money laundering failures
Heritage buys Golden Healthcare; not mystery Metlife suitor
Alliance margins improve as swine fever boosts global meat prices
RBNZ eyes Westpac Australia money laundering failures
Precinct eyes new developments as Commercial Bay keeps to revised schedule
End to Tower's three year dividend drought in sight

IRG See IRG research reports