Asciano restructures to boost operations

Asciano set for the next stage in its market share battle with trucking sector, QR and new stevedoring entrant

By Rob McKay | June 29, 2010

Asciano has taken another step in gearing itself up financially for the next stage in its market share battle with the road haulage sector, Queensland Rail and the possibility of a new stevedoring entrant.

The owners of Pacific National and Patrick Stevedores has changed in corporate structure from stapled security to single holding company, NewCo, with the aim of making the firm attractive to a broader range of investors.

It has also restructured its bank facilities to allow increased borrowings.

"The amendments provide us with flexibility to fund Asciano’s significant growth profile and allow us to refinance our $2.25 billion debt maturing in May 2012 in the debt capital markets," Managing Director and Chief Executive Mark Rowsthorn says.

"By providing access to the full range of funding options, these amendments will significantly improve Asciano’s financial flexibility.

"We can now commence implementation of our medium term debt strategy to diversify our funding and lengthen our maturity profile."

On the intermodal freight front, the ability to take on more debt will allow it to consolidate its hold on long-haul north-south and east-west corridors.

In an investor briefing last month, Intermodal Director Chris Keast put Asciano’s rail market share on the routes at 70 percent.

The intermodal arm expects to raise its market share at the expense of road haulage due to the impact of environmental issues, federal government rail infrastructure investment coming online, increasing road congestion and the introduction of safety and chain of responsibility obligations.

Ironically, some of the biggest names in trucking are supporting its business, as freight is more contestable for rail over greater distances.

Its deals with companies that make of 63 percent of revenues include:

• a five-year Toll linehaul contract;

• Linfox exercising an option to extend a long-term contract at least to December 2012;

• K&S in the second year of a five-year contract;

• BlueScope Steel and OneSteel contracted until at least December 2014;

• a recent extension of the Sadleirs contract to 2017.

Perth rail terminal precinct sites for both Toll and K&S are also being developed.

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