FreightLink on chopping block as rail link flounders

By: Jason Whittaker


FreightLink, the owner and operator of the embattled Adelaide to Darwin railway, will be sold amid mounting debts and slow

FreightLink, the owner and operator of the embattled Adelaide to Darwin railway, will be sold amid mounting debts and slow freight volume growth.

The company has announced expressions of interest will be sought from parties "in relation to the proposed sale of FreightLink".

In a statement, FreightLink says it has achieved "outstanding growth" since winning the right to build the rail link between Alice Springs and Darwin and the contract to operate the 2,240km Tarcoola to Darwin railway under a 50-year agreement.

But bank lenders have forced the sale after years of under-performance and volume growth that failed to meet expectations.

It comes despite the company securing three major minerals haulage contracts. In 2006 FreightLink commenced haulage of bulk manganese ore from the Bootu Creek mine 120km north of Tennant Creek, last year it started hauling iron ore for Territory Resources at Frances Creek, and later this year it will begin to carry copper/gold concentrate from the Prominent Hill mine in South Australia.

The company says it has also carried over 2.5 million tonnes of general freight, excluding minerals, since beginning operations.

FreightLink CEO John Fullerton insists the business is well positioned to further expand its activities in the emerging minerals sector along the Adelaide to Darwin rail corridor.

"The sale of the business which we are announcing today will provide the opportunity for the new owners of FreightLink to capture substantial growth in the future, especially from the haulage of bulk minerals for export and to participate in new rail opportunities across the interstate network," he says.

"Quality rail assets in Australia are highly regarded for their strategic value and this presents a rare opportunity for investors to acquire a rapidly growing business in the transport and logistics industry where rail will play an increasingly significant role."

FreightLink has appointed UBS as its sale adviser.

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