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Toll deal sidelines rival freight firms

By Graeme Kennedy

Friday 11th July 2003

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Australia's Toll Holdings reinvigorated its bid to gain control of Tranz Rail after stitching up a deal with the government over track ownership and to put on hold its rival bailout plan. But further moves look likely before it can be clinched.

Toll has to clear the hurdle of 90% acceptance for its new 95c offer, which is under renewed scrutiny by appraisers Grant Samuel so Tranz Rail directors can make a recommendation to shareholders.

The Toll deal angered a team of Mainfreight executives and institutional investors who were on Sunday still trying to convince the government to keep TranzRail in New Zealand ownership ­ unaware the Toll decision had already been made and was to be announced the next day.

Mainfreight managing director Don Braid said the government had taken a "pitiful" option to get the deal completed. "It was a cop-out," he said.

"We were talking with government and Treasury officials and their advisers, trying to get them to lift their bid above 67c to compete with Toll," Mr Braid said.

"We wanted it lifted to a reasonable level so the institutions would favour the New Zealand option and run with the government bid.

"But they took the easy option with Toll's 95c bid ­ they listened to us but gave no indication they had been in secret talks with Toll for a week. We were snubbed."

Mr Braid said the government had handed the Australians sole access to the railways, the ferries and the country's biggest trucking group TranzLink. "They could now control the biggest piece of New Zealand's transport sector."

He said the deal might not get the required 90% acceptance as institutional investors wanted a higher price.

Tranz Rail shares traded yesterday at the 95c offer price, indicating a higher offer is not guaranteed.

An earlier Grant Samuel appraisal report, issued on Monday, valued the shares at 65-87c on grounds there was uncertainty about the value of the alternative plan.

Meanwhile, Owens Group CEO David Ritchie said the company remained interested in buying TranzLink ­ "if the price and conditions were right."

Toll's new offer is due out by July 25 and its deal with the government runs for 60 days.

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