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Tranz Rail buy-out rumour sweeps NZ markets

<p>Speculation on the future of Tranz Rail has taken a more dramatic turn this week after rumours the New Zealand Government may buy the entire company.</p> <p>The operator’s share price on Monday hit its highest level since November last year after a weekend of media speculation that a Tranz Rail buy-out was an option for regaining control of national rail at a competitive price.</p> <p>The share price reached NZ$1.44 as investors traded massive volumes on the back of reports that government number crunchers were examining the takeover option. </p> <p>The government could buy the national rail operator for as little as NZ$91m if it sells Tranz Rail’s remaining freight and passenger operations, according to a Macquarie analyst quoted in the <em>Sunday Star-Times</em> .</p> <p>It might pay NZ$2 a share &#8211 NZ$420m for the company &#8211 and take on NZ$241m in debt for a total purchase price of NZ$641m, the paper speculated.</p> <p>The government could then sell Wellington’s Tranz Metro to the local regional council for NZ$80m and the remaining freight and passenger operations, including Cook Strait Ferries, for around NZ$490m &#8211 giving it the rail network for around NZ$91m, the analyst said.</p> <p>This compares favourably with the previous week’s rumoured government offer of NZ$120-NZ$130m for the rail network alone and the estimated NZ$340m "book value" of the network. </p> <br />