Toll toils on as Patrick paints grim outlook

<p>The Toll Group has not given up on taking over the Patrick Corporation, despite the Australian Competition and Consumer Commission’s (ACCC).rejection this week of its bid. </p> <p>Meanwhile, Patrick has warned that financial returns from their joint venture, Pacific National, are going off the rails. </p> <p>Toll has been in intensive talks in the past two days with the ACCC on salvaging the deal, which many analysts maintained from the start could have only got through with a major disposal of its stake in Pacific National. </p> <p>Toll this morning (Friday, January 20) told the Australian Stock Exchange it would consider the ACCC’s concerns and it has extended its offer to Patrick shareholders until February 13.</p> <p>Toll’s share price has been battered by the failure with the regulators, continuing to fall this morning to more than $2 below its pre-announcement price, which was just above the $12 mark. </p> <p>However, Toll’s target responded this afternoon with a claim that Pacific National was heading for a sharp reduction in profit after tax for the six months ending December 31.</p> <p>Patrick said the anticipated profit of $29m &#8211 a 48% down on the previous corresponding period &#8211 did not include the write-down of Tasmanian intermodal assets, estimated to be $14.5m.</p> <p>This matter is still in dispute between the shareholders of Pacific National.</p> <p>Patrick said the intermodal divisions expected to decrease by 34%, with the new Queensland intermodal operation continuing to operate at a loss.</p> <p>Coal revenues were flat with a slight decrease in margins, Patrick said.</p> <p>The rural and bulk division’s performance was also disappointing due to lower grain volumes, difficulties with shipping schedules and the impact of industrial action.</p> <p>Commenting on the expected result, Patrick managing director Chris Corrigan said Patrick was "gravely concerned" with the present financial performance and short-term outlook for PN.</p> <p>The company has no chief executive and a number of other senior management vacancies.</p> <p>"The company is immediately faced with significant strategic challenges which in the current climate are unable to be addressed," Mr Corrigan said.</p> <p>He expressed concern over enterprise negotiations that have stalled and the disagreement between the shareholders over the future direction of the Tasmanian business.</p> <p>However, Patrick qualified these concerns by stating that the management does not believe that there is a need at this time to change the overall forecast results published in the company’s target statement of October 18, 2005.</p> <p>Some analysts say that Toll’s shares will remain under pressure unless it comes up with a fresh plan for its takeover.</p> <p>An analyst said that were Toll to dispose of its share in Pacific National, ithe move would be too damaging for Toll’s other businesses. </p> <p>Other analysts were sceptical that taking the ACCC to court for a remedy would be worth the time, cost, and risk of a further loss given the scale of the ACCC’s rejection.</p> <br />