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Tuesday, November 29, 2005

Toll ready to flog ships to get Patrick -

Toll ready to flog ships to get Patrick - Business - Business - smh.com.au
TOLL Holdings has offered to sell ships, abandon the automobile freight market and loosen its hold over east-west rail to win competition approval for its $4.6 billion bid for Patrick Corp.

The transport giant's undertakings, released by the Australian Competition and Consumer Commission, aim to meet the ACCC's main concerns about the proposed takeover.

The regulator's concerns centre on the potential of the two companies' rail joint venture, Pacific National, to shut out freight forwarders and rail rivals, particularly on the main rail line to and from Perth; their dominance of Bass Strait shipping services to Tasmania; and their control of the autologistics market.

Specifically, Toll has undertaken to sell the two ships used by Patrick on Bass Strait and berthing rights at Webb Dock East in Melbourne and Burnie in Tasmania.

It will also sell its 33 per cent stake in PrixCar Services, which carries cars to and from the port.

On the east-west rail corridor, Toll has offered to lease six locomotives to Chicago Freight Car Leasing Co (CFCL) so it can lease them to other rail operators. This aims to meet the ACCC's concern about the availability of second-hand or leased locomotives.

CFCL declined to comment on Toll's offer. Toll managing director Paul Little said if no deal was reached with CFCL, Toll already had in mind other independent leasing companies.

Toll has also undertaken to allow the Australian Rail Track Corp to change train path allocations to allow another operator to use the east-west track.

The Federal Government-owned ARTC regulates the interstate rail network and controls access to the track.

Toll Holdings said it would not make any undertakings on terminals because rail competitors had access to terminals in Perth, Adelaide and Melbourne. "Those companies most likely to expand on the east-west rail corridor are SCT Logistics, Queensland Rail and Australian Rail Group," Toll said.

But Toll did not respond to one of the ACCC's other concerns: the potential of the two companies to create too powerful a position in the broader land logistics supply chain for international containers.

Patrick said Toll had ignored the issue of freight forwarding in Tasmania, and had not addressed the competition issues raised by the merged entity owning all the major rail freight terminals in the capital cities.

Patrick managing director Chris Corrigan said Toll's undertakings on Bass Strait and Pacific National were not in the interests of Patrick shareholders.

"Those few Patrick shareholders who have accepted Toll's offer are entitled to withdraw and retain their shareholding in Patrick," he said.

Toll shares closed 11c higher at $13.71, while Patrick shares fell 9c to $7.26.


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