ON MARCH 29 RailAmerica announced that it had reached agreement to sell its Victorian operating subsidiary Freight Australia to Pacific National for A$285m. The deal is subject to ratification by the Victoria state government and the Australian Competition & Consumer Commission.
RailAmerica purchased Freight Australia from the Victorian government in 1999 for A$163m, but last year the group decided to concentrate on its core North American operations. Pacific National has already paid A$14·25m in cash for Freight Australia, and will pay the remainder when the deal is completed. This will enable RailAmerica to pay off US$59m in senior debt.
Freight Australia CEO Marius van Onselen said it was ’the only rail business privatised by the Kennett government to exit with cash in its pocket’, noting that the management team ’can be proud of their achievements in turning the business into a profitable rail company for the shareholders.’
Toll Holdings Managing Director Paul Little said the deal offered ’significant added value’ for both Victoria and Pacific National. He insisted that Pacific National was keen to take over the remaining 40 years of Freight Australia’s lease on 4000route-km in Victoria, where the primary traffic is grain. n
