AusRAIL, Market Sectors

Patrick sees Toll in court, on eve of ACCC bid finding

<p>Patrick Corp has taken its dispute with Toll Holdings over Pacific National into the Victorian Supreme Court, seeking $510m in damages for the rail operator from Toll and Toll directors Paul Little and Mark Rowsthorn over alleged "deceptive and misleading conduct" in the contract between Toll North and the Toll&#47Patrick joint venture.</p> <p>The legal action has started with the Australian Competition and Consumer Commission expected to announce its view on Toll’s bid for Patrick as early as the close of the market tomorrow (Wednesday, January 18). </p> <p>A full meeting of the ACCC’s commissioners is due tomorrow, after the meeting of the Mergers Panel today. </p> <p>Patrick took Toll to court after failing to get the rail row dealt with through the joint venture’s dispute procedure. </p> <p>Patrick had then threatened to go as far as using the dispute mechanism to break up Pacific National. </p> <p>Patrick has alleged that Toll misled Pacific National into signing an agreement which handed all of Pacific National’s expanded Queensland capacity to Toll North at prices and operating costs which would never give Pacific National the 16% rate of return needed to cover its $131m investment in new equipment. </p> <p>The deal was also supposed to leave 20% of Pacific National’s capacity in Queensland free for sale to other forwarders. </p> <p>Patrick says the deal to which it was misled into agreeing would cost Pacific National $510m in expected revenue over the life of the contract, and also badly underestimated capital and running costs. </p> <p>The court has set a directions hearing in one month, February 17, suggesting that it has not accelerated the legal challenge because of Toll’s takeover bid for Patrick. </p> <p>ACCC approval of Toll’s bid for Patrick should boost Toll’s share price, automatically improving Toll’s scrip-based offer and reducing the extra cash that Toll may need to find to sweeten the deal. </p> <br />