Tranz Metro Wellington
Tranz Metro Wellington
Tranz Rail announced today that the joint venture party between Wellington Regional Council and Stagecoach has ruled itself out as a purchaser of Tranz Rail’s Wellington Metro operations through failure to conform with the required sales process.
Michael Beard, CEO of Tranz Rail responded “We had asked that the joint venture submit an indicative, non binding bid after reviewing certain information that we would provide to them. That would have allowed the joint venture to proceed to due diligence and then negotiate a final price after confirmation of the information provided. Naturally the joint venture would be entitled to adjust its initial indicative bid in light of the greater knowledge gained by the due diligence process. This process is absolutely standard in commercial trade processes. There is no point, and in fact it could be damaging to Tranz Rail, to allow the joint venture to enter into due diligence with the resulting costs and disruptions to the business, if we have no understanding that the transaction will be completed at a value acceptable to Tranz Rail and its shareholders”.
“We are also very concerned that Wellington Regional Council (or elements of WRC) having disqualified itself from the sales process, is now talking about unilaterally reducing the subsidy or investigating running some 200 buses in competition at a capital cost of $50million and a higher operating subsidy component. Why the WRC would want to threaten the infrastructure asset that is Wellington Metro rail in favour of other less efficient and more costly forms of passenger transport, is beyond us. To do so after disqualifying itself as a purchaser of Wellington Metro also gives us concerns about the commercial maturity of its whole approach to the sale”.
“Wellington Metro is a vital part of Wellington’s commuter network and should be supported by local government in the best interests of the greater Wellington region. We believe recent comments from certain elements of the WRC to be inappropriate and in reality unworkable. It would be more productive for that sector to support Tranz Rail in its efforts to find the best operator for its passenger rail operations, not to actively look for ways to sabotage the operations. Ultimately we believe more cooler, wiser and rational heads will prevail”.
Rail is now committed to conducting a competitive tender
process to bring the best passenger operator to Wellington
Metro operations. Shortly, the company will be asking for
expressions of interest as the first step in the competitive