Little argues Toll restructure `good for competition'

Little argues Toll restructure `good for competition’

Toll Holdings is seeking to dodge its divestment obligations, splitting its group in two in a move that would see it retain full control of Pacific National and its vehicle transport businesses. And so far, the corporate watchdog has raised no objections. Under a restructure the company proposed today (Wednesday, December 13), Toll would split into two top 50 ASX listed companies &#8211 Toll Holdings and Infrastructure Co. Mr Paul Little would retain his postion as managing director of Toll Holdings, while Tell’s present executive director, Mark Rowsthorn, would become chief executive of Infrastructure Co. Toll has sought a waiver of the requirement of Toll to sell 50% of Pacific National. It has also sought a waiver of its obligations to make available the starters kit of rail assets, to divest the Toll vehicle transport business and its interest in the PrixCar business, and to implement the rail and port non-discriminatory regimes. Retaining control of 100% of Pacific National was in the best interests of stakeholders and employees, Mr Little said. "The Australian Consumer and Competition Commission views the proposal favourably and will be making market soundings as is usual," Mr Little said. ACCC chairman Graeme Samuel said today the commissioin had not yet formed a view in relation to the proposed variation, and would make its decision after market inquiries. "In particular, if market inquiries do not raise any issues of concern to the ACCC in relation to Toll’s obligation to divest a 50% interest in Pacific National, the ACCC would look favourably on such a waiver," he said. That said, Toll was still obliged to continue the process to make east-west rail assets available in accordance with the timeframes set out in the current ACCC undertaking, he indicated. "While assessing this application, the ACCC is very concerned to ensure that the process currently under way to make available the east-west rail assets is not delayed or disrupted," Mr Samuel said. "Only if market inquiries satisfy the ACCC that the obligations to make these assets available ought to be waived, will the ACCC agree to do so." The restructure did not affect Toll’s obligations to divest the Patrick Bass Strait Shipping and freight forwarding operations, Mr Samuel said. Committing to a long-term management position with Toll Holdings, Mr Little said he was "very excited and passionate" about the future of the logistics business. "We are not a trucking company," he said. "The restructure will produce an outcome which is good for all stakeholders &#8211 shareholders, customer, employees &#8211 which is also good for competition." Toll Holdings would handle domestic logistics, freight forwarding, distribution and warehousing, defence logistics and express freight. Toll New Zealand would be brought under the Toll Holdings structure, and its 62.3% stake in Virgin Blue Australia would stay with Toll, with "the potential for further value creation already experienced and currently enjoy". Toll Holdings would also comprise the Asian logistics businesses of Toll, including the logistics businesses acquired with the takeover of Patrick Corporation. Infrastructure Co was positioned to be the leading transport infrastructure group in Australia with global aspirations, Mr Little said. "It will own two world class assets &#8211 PN and Patrick Ports &#8211 and will continue to invest in similar assets offshore," he said. The business would focus on investment opportunities in ports, rail, airports, toll roads and similar assets in Australia and offshore. "Growth will be encouraged as each business will have a more appropriate capital structure," Mr Little said. "Each business can be positioned alongside investors who value their particular assets, and banks who are comfortable lending against those assets. This will result in each business having an appropriate cost of capital. "We’re delighted to reposition the business with greater regulatory clarity." The two businesses would be structured with a different pool of directors for the two boards and different skill sets, Mr Little said. Shareholders would retain their existing shares in Toll Holdings and receive one new stapled security for each Toll share they hold, consisting of one share and one unit in Infrastructure Co. The proposal for the restructure will be put to shareholders for approval via Schemes of Arrangement during the first half of 2007.

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