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Meeting on Toll’s Agreement With The Crown

Takeovers Panel To Meet On Toll’s Agreement With The Crown

The Takeovers Panel has decided to hold a meeting to determine whether Toll Group (NZ) Limited (Toll) has complied with, is complying with, or intends to comply with rule 38 of the Takeovers Code by entering into an agreement (Toll/Crown agreement) with the Crown in relation to Tranz Rail Holdings Limited (Tranz Rail) on 7 July 2003.

On 22 July 2003 Infratil Limited, a substantial security holder in Tranz Rail, sent the Panel a formal request to hold the meeting. Rule 38 of the Code is concerned with defensive tactics by the directors of a code company which has received a takeover offer or who believe a bona fide offer is imminent.

Under the Toll/Crown agreement the parties agreed that: neither party would enter into any negotiations or arrangements which are inconsistent with the Toll/Crown agreement until Toll’s current offer for Tranz Rail is withdrawn or lapses.

In particular they agreed that no alternative Heads of Agreement would be negotiated or entered into by either party; in the event that Toll’s current offer for Tranz Rail becomes unconditional, the Crown would enter into a Heads of Agreement with Tranz Rail and Toll relating to the rail tracks and other assets of Tranz Rail; Toll would use its best endeavours to procure Tranz Rail to enter into the Heads of Agreement with the Crown as soon as practicable after Toll declares its offer unconditional.

Infratil alleges that, in contravention of rule 38: the exclusive nature of the Agreement could effectively result in an offer for Tranz Rail being frustrated and/or the shareholders of Tranz Rail being denied an opportunity to decide on the merits of an offer; in respect of the Agreement, Toll is acting on behalf of the directors of Tranz Rail or is a director of Tranz Rail itself for the purposes of the Code.

The Panel considers that Toll, by entering into the Agreement with the Crown, may not have complied, may not be complying, or may intend not to comply with rule 38 of the Code. The Panel decided not to issue any restraining orders in relation to Toll’s current offer for Tranz Rail. A formal notice of the Panel’s meeting is available on the Panel’s web-site at

The Panel’s meeting will be held in Wellington on Monday 4 August 2003. It will be private meeting.

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