Asciano outcome is delayed by election

27 May, 2016 02:00 AM

FOREIGN Investment Review Board (FIRB) approval of a $12 billion scheme of arrangements to split up Australia's largest rail freight and ports operator has been delayed by the July 2 federal election.

In an Australian Securities Exchange (ASX) announcement last week Asciano said it had agreed to an FIRB request for an extension of time due to the Federal government entering caretaker mode ahead of the election.

The FIRB website explains that "significant decisions which may bind future governments" are not generally taken during the caretaker period after an election has been called.

Aspects of the proposed splitting of Asciano's businesses three ways between consortiums headed by Qube Holdings and Canadian-based Brookfield Infrastructure Partners, and their international affiliates, require FIRB approval.

The scheme also requires Australian Competition and Consumer Commission (ACCC) approval.

Last year the ACCC "red flagged" concerns about an original $8.9b Brookfield bid for Asciano because of potential conflict of interest with its Brookfield Rail subsidiary operating the WA freight network and the parent company acquiring rail logistics operator Pacific National, a customer on the network.

Pacific National's interstate containerised freight and bulk freight, regional freight and "hook and pull" passenger train services, such as the iconic Indian Pacific trans-Australia train, generate about 64 per cent of Asciano's revenue.

The ACCC suspended its review of the original Brookfield takeover bid and a counter bid from Qube when they combined to propose the scheme to split up Asciano's business to avoid the conflict-of-interest concerns.

Asciano shareholders are due to consider the scheme of arrangements at a special meeting in Sydney on Friday next week, but that meeting is likely to be postponed.

Directors and independent expert Grant Samuel and Associates have concluded that in the absence of any alternative, the scheme was in the best interests of shareholders.

Asciano had hoped to have FIRB and ACCC approval before next week's shareholder meeting and its indicative timeline listed June 30 as the scheme implementation date.

But its ASX statement last week said FIRB approval was hoped for no later than July 22.

Asciano had also hoped to be able to update investors and the NSW Supreme Court today on the scheme of arrangements timetable.

Via its subsidiary Patrick Ports Logistics, Asciano is equal partner with Australia's biggest on-road container mover ACFS Port Logistics in ACFS Logistics, created in April last year.

Arthur and Terry Tzaneros, who head ACFS Port Logistics, initiated legal action in the Supreme Court earlier this month.

Mal Gill

Mal Gill

is wool and dairy writer for Farm Weekly


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