Tranz Rail to buy out Aratere lease

Tranz Rail to buy out Aratere lease

Auckland, New Zealand - Tranz Rail Holdings Limited [NZSX: TRH]

Tranz Rail Chairman Wayne Walden said today that he is pleased to announce that the board has decided to exercise the company's option to buy out its lease of the ship Aratere.

In May of this year the company secured an option to buy out the lease after negotiations with the United States based parties to the arrangement .The option had to be exercised by the end of this month.

Toll Finance (NZ) Limited has agreed to provide a facility of $77 million so the option can be taken up. The facility is subject to satisfaction of a number of conditions including formal consent of the Toll board. That consent is expected to be in place by the end of the day.

Mr Walden said, "The board are pleased to be in a position to exercise this option.

"We originally intended to use the proceeds of the issue of equity to the Crown to finance this but the deferral of that transaction meant that we had to seek alternative sources of funding.

"We are pleased that Toll has agreed to provide us with a loan to enable us to exercise this option. The terms of the facility are commercially based and more favourable for Tranz Rail than the current arrangements under the lease.

"The NZX have provided Tranz Rail with a waiver to enable this transaction to proceed. The details of that waiver will be released by the exchange shortly," said Mr Walden.

Tranz Rail will receive various benefits by exercising the option including reducing its foreign exchange risk, freeing up security and releasing a US$15.5m cash deposit currently held in the US.

The deal will settle on 30 September at which time Tranz Rail will take full ownership of the Aratere.

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