By Deborah Hill Cone
Friday 16th May 2003
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Florida-based short-line company RailAmerica pounced yesterday with a 75c a share takeover offer for Tranz Rail, in a move that shut down talk of the government buying back tracks.
"We would prefer to have an operator with adequate strength that would be a good step forward but it is a lost opportunity for a giant stride forward,"Rail Freight Action Group spokesman Cedric Allan said.
RailAmerica has promised it will recapitalise the cash-strapped company, paying back debt to Tranz Rail's long-suffering bankers.
But although it is listed on the New York Stock Exchange and bills itself as the world's largest short-line and regional rail company, RailAmerica is not a financial giant, with shareholders' equity of $525 million and profit last year of $3.8 million ($US2.1 million).
But it is cash-rich compared with Tranz Rail, which has been selling off assets in an attempt to raise cash to meet debt payments to its bankers.
RailAmerica Australian subsidiary Freight Australia managing director, Marinus van Onselen, said he would meet Finance Minister Michael Cullen on Tuesday and indicated issues such as subsidies for continuing with passenger services would be on the agenda.
He did not rule out doing a deal with the government to sell the tracks if it was something "it felt strongly about ... But I like to be in control of the levers."
Meanwhile, RailAmerica chairman and founder Gary Marino played up his trainspotter credentials at a press conference in Auckland yesterday, saying he had started the company with $100,000 of his own personal capital when he bought a loss-making 83-mile- long piece of rail in 1986.
"People said we were crazy," Mr Marino said.
RailAmerica now has operations in the US, Canada, Chile and Australia and assets of $1.9 billion.
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