28 Oct 2011

KiwiRail to slash asset value

9:30 pm on 28 October 2011

KiwiRail wants to write down the value of its assets by nearly half.

The value of the assets up to now has been based on a replacement value of $13 billion, but chairman John Spencer told the company's annual public meeting on Friday that a review during the past year has shown that to be an inappropriate valuation.

Mr Spencer says KiwiRail has recommended to its shareholder, the Government, that the assets be revalued on the basis of their productive earning value.

KiwiRail is also proposing to split into two entities - one that would hold all land in the rail corridor, which is valued at about $5 billion, and the other - likely to keep the name KiwiRail - responsible for about $1 billion worth of assets and day-to-day operations.

No plan to sell land

Chief executive Jim Quinn says essentially it's a paper transaction and won't change how they operate. He says land owned by KiwiRail does not generate productive earnings and distorts their balance sheet.

Mr Quinn says they don't plan to sell any land or the KiwiRail business itself.

If the Government signs off on the split, he says, the new structure will be in place from 1 July.