RailAmerica, Inc., the operator of short line and regional freight railroads, announced that its newly formed subsidiary, Rail New Zealand, intends to commence a tender offer for 100% of the equity securities of Tranz Rail Holdings Limited.
Tranz Rail is a multi-modal freight transportation company providing both freight and passenger services in New Zealand. Tranz Rail's operating revenue for the fiscal year ended June 30, 2002 was US$331 million. Tranz Rail is the sole provider of rail freight services in New Zealand and operates metro passenger services in Auckland and Wellington.
Tranz Rail's network includes approximately 2,400 miles of track utilizing 267 locomotives and over 7,000 railcars and containers. It also operates a freight and passenger ferry service that links the North and South Islands of New Zealand.
Pursuant to its notice, Rail New Zealand intends to offer NZ$0.75 cash for each ordinary share of Tranz Rail (including those represented by American Depositary Receipts). The offer is for all of the ordinary shares and all other equity securities issued by Tranz Rail. The total offer value for the equity is approximately US$90 million.
In addition, Rail New Zealand will assume or refinance approximately US$135 million of Tranz Rail's existing lease obligations and indebtedness outstanding at December 31, 2002, net of cash. The offer represents a 65% premium to Tranz Rail's last one month's volume weighted average price and a 44% premium to the closing price on May 14, 2003. RailAmerica intends to seek lender consent under its existing credit facilities for the offer. RailAmerica intends to fund the offer through its existing credit facilities and/or other sources. RailAmerica has retained UBS Warburg and Morgan Stanley to act as financial advisors in connection with the offer.
Consistent with New Zealand's Takeover Code, no agreement or arrangement has been made, or is proposed to be made, between RailAmerica or Rail New Zealand, and Tranz Rail in connection with the offer.
The offer is scheduled to commence in New Zealand between May 30, 2003 and June 14, 2003, and close at 5:00 p.m. New Zealand time 30 days after the offer is circulated, unless extended. The offer will be conditional upon, among other things, holders of Tranz Rail equity securities tendering 90% or more of the voting securities of Tranz Rail, Rail New Zealand obtaining all necessary consents to complete the offer under the Overseas Investments Regulations of 1995, Tranz Rail refraining from selling or agreeing to sell any businesses or assets outside the ordinary course of business, and RailAmerica obtaining lender consent for required waivers and amendments to its existing credit facilities.
