PN frontline sparks Toll and Patrick clash

<p>Toll and Patrick’s relationship in its joint venture rail operation Pacific National is under serious discussion today (Friday, September 2) following the eruption of a major dispute over a freight contract.</p> <p>The two transport giants have been able to keep at arms’ length since Toll launched its hostile takeover bid for Patrick but not so with the Pacific National board meeting yesterday. </p> <p>How the pair will continue to manage this rail joint venture relationship during the months needed to resolve the takeover bid is "an emerging issue", a Patrick spokesman said. </p> <p>As far as PN management is concerned, it is a case of "business as usual", a PN spokeswoman told <em>Lloyd’s List DCN</em> .</p> <p>The row that developed in the PN board meeting is centred on a 20-year "take or pay" agreement that PN’s Queensland operation entered into with Toll for carriage of freight into Northern Queensland.</p> <p>In June 2004, Pacific National conducted its own investigation on the agreement to explain "extensive capital expenditure overruns in the project", a Patrick spokesman said.</p> <p>"A subsequent investigation by Patrick into Pacific National agreement with Toll has uncovered up to $510m forecast loss of revenue to the Pacific National joint venture," he said.</p> <p>Yesterday, Toll representatives on the PN board rejected a motion to conduct a board investigation into the operation of Pacific National’s North Queensland rail freight agreement with Toll Holdings, the Patrick spokesman said.</p> <p>Toll managing director Paul Little told the <em>Sydney Morning Herald</em> the dispute was "a storm in a teacup" and a matter that should have been resolved with inside PN.</p> <p>Toll believes the amount in dispute is less than $20m in net present value terms.</p> <p>Mr Little said Patrick’s actions were not surprising.</p> <p>"We’re in the middle of a hostile bid and I guess if Patrick want to be that way it’s really up to them," Mr Little told the paper.</p> <p>But the Patrick spokesman told <em>Lloyd’s List DCN</em> that the dispute pre-dated the board meeting yesterday.</p> <p>Patrick was going to raise the issue at the PN board meeting planned for Monday (August 22) last week &#8211 the meeting that was cancelled to make way for Toll’s announcement of its intentions to buy out Patrick, he said.</p> <p><em>Lloyd’s List DCN</em> was still awaiting comment from Toll Holdings at the time of going to print.</p> <br />