15 Sep 2008

Buyout talks with Toll bitter, documents show

5:11 pm on 15 September 2008

Documents released by Finance Minister Michael Cullen reveal how bitter negotiations with Toll New Zealand became before the Government bought back the rail operation.

It included a warning that Toll was preparing to publicly attack the Government-owned company responsible for the tracks if the purchase fell through.

The Government began considering buying back the train and ferry service in late 2006, but the negotiations became dogged by ill-feeling.

Ontrack, negotiating on behalf of the Government, made an indicative bid of between $300 million and $350 million. Toll wanted $1 billion.

The bid was raised to $632 million - the Government eventually paid $690 million - but as late as April the talks were close to collapse.

In one memo, Dr Cullen's adviser, Chris Mackenzie, warned that Toll believed it was being driven into a corner and was prepared to expose Ontrack's overheads and allege they were excessive.