Tuesday, December 21, 2010

GWI completes FreightLink acquisition

After having been put up for sale three times by receivers KordaMentha, the Adelaide-Darwin railway has finally been sold, with American rail operator Genesee & Wyoming buying the assets of FreightLink for $334m.

Genesee & Wyoming Australia managing director Bert Easthope said the completion of the FreightLink acquisition heralds a “new era” for rail in South Australia and the Northern Territory.

“The railroad is a strategic asset in the development of the mining industry in SA and the NT. We welcome the opportunity to support and invest in the future growth of our customers,” Easthope said.

Receivers were appointed in November 2008 after FreightLink was unable to obtain all of the required consents for a voluntary sale of the railway, with reported debts in excess of $500m.

Heavy debts incurred during construction meant the 1420km line had been running at a loss. The railway cost $1.2bn to construct, with $475m of this coming from state and federal government funds. Approximately half of FreightLink’s $900m investment into the railway was debt.

Buyers had failed to come forward twice, though KordaMentha said this was because of issues related to the Global Financial Crisis such as funding availability.

Accounting for 90% of freight between Adelaide and Darwin, FreightLink currently has three major rail haulage contracts with AusMinerals, OM Holdings and Territory Resources. It operates 24 bulk trains a week between mine sites and the Port of Darwin and carries in excess of 3m tonnes of bulk freight, 800,000 tonnes of intermodal freight and 70,000 tonnes of bulk liquids per year.

Story courtesy of Rail Express

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