AusRAIL, Market Sectors

Victorian Government dragging its heels on PN deal: Freight Australia

<p>Freight Australia has called on the Victorian Government to get on with the decision on the operator’s proposed sale to rival Pacific National.</p> <p>The ACCC gave its blessing to the sale last week and Freight Australia said any further delays in state approval are not in the public interest.</p> <p>A company spokesman said Freight Australia had given the State Government and prospective buyer Pacific National all the information they needed and the Government just needed to make a decision.</p> <p>The Government’s wish to change track lease arrangements is the major cause for delay and Freight Australia’s parent company, RailAmerica, is still contemplating legal action over the Government’s involvement in the sale process.</p> <p>"RailAmerica has to take action to protect its shareholders in America," the spokesman said.</p> <p>"The State Government can’t legally do anything to damage RailAmerica commercially.</p> <p>"That’s RailAmerica’s legal position."</p> <p>The US operator believes the dissemination of a $2 clawback clause for the 45-year track lease &#8211 which FreightAustralia bought for $89.7m &#8211 forced Pacific National to slash its offer by more than $80m, he said.</p> <p>A draft letter was also sent to prospective buyers proposing changes to the track lease that would ban the leaseholder from making a profit on the third party access or paying shareholder dividends based on access earnings, the spokesman said.</p> <p>"That was a totally unreasonable proposition," he said.</p> <p>Under the present arrangement, Freight Australia had been able to make a 10% profit on access earnings but was not allowed to recover its up front costs of $89.7m.</p> <p>Freight Australia estimates it has re-invested about $130m improving services and maintenance.</p> <br />