Alice-Darwin rail giant goes bust

Daniel Burdon

07Nov08

DEBT-RIDDEN operator of the Adelaide-to-Darwin railway FreightLink has been unable to sell its business, and has been forced into voluntary administration.

The company, plagued by a $1.2 billion debt from the construction of the Alice Springs-to-Darwin leg of the line, has had to enlist one of Australia's top insolvency practitioners.
KordaMetha's Martin Madden, the official liquidator for the Supreme and Federal Courts, was appointed yesterday to manage the company's receivership.

In May this year, FreightLink began the process to sell, and with a number of interested parties, the company almost settled on an offer that was higher than the company's level of senior debt.
But when middle range debt holders could not unanimously agree on the offer, the company "voluntarily" appointed Mr Madden.
Mr Madden said: "Basically, what I am hoping to do is re-appoint UBS Investment Bank, who was working on the sale process for the company.
"They had done a great deal already before I came on board, and so I want to assess their work and expedite the profits. When they went into a two-stage process to cut the offers down to a small group _ I want to re-visit that group, look at any possibilities and take it from there.
"Then I want to get a contract signed, and transfer the asset into safe hands."
Mr Madden expects the process should be complete by the end of January next year, everything going well.
FreightLink chairman Malcolm Kinnaird said the board had been very disappointed the sale process, which had yielded an attractive bid, had been thwarted by the inability to achieve consensus within in its mezzanine debt holders.
It is understood the railway will continue to operate during this period.