Rail and investment giants to battle it in NSW Supreme Court

Aurizon rights of first refusal case ropes in Genesee & Wyoming, Brookfield and Macquarie

Rail and investment giants to battle it in NSW Supreme Court
The Genesee & Wyoming deal is being questioned in court


The Australian rail freight industry is to see a rare instance of battling behemoths as Aurizon seeks damages and declarations in the Supreme Court of New South Wales against Genesee & Wyoming (G&W) over contractual rights going back 14 years.

Aurizon states the rights accrued between subsidiaries of the companies under a 2006 rights of first refusal agreement (ROFRA) on certain G&W Australia (GWA) assets, when the then QR National bought the above-rail assets of the Australian Railroad Group (ARG) in Western Australia.

ARG at that time was owned by a joint venture of G&W and Wesfarmers.

The legal move comes after G&W revealed on August 5 that it had agreed to sell its 51.1 per cent stake in GWA after Brookfield and GIC announced their joint purchase of G&W.

Read how the $11 billion G&W purchase bid broke cover, here

Aurizon’s case comes in two parts, with G&W allegedly entering into:

a partnership with Macquarie Infrastructure and Real Assets (MIRA) and Dutch pension fund manager PGGM in 2016 in relation to the Australian assets, without first offering them to Aurizon, and doing so on terms that undermine Aurizon’s rights under the ROFRA

a sale agreement with MIRA and PGGM in August to transfer its remaining partnership interest to those entities "on terms that are inconsistent with Aurizon’s rights".

The GWA assets include bulk and general freight assets in South Australia and the Northern Territory including the Tarcoola-to-Darwin rail line and rollingstock, together with coal haulage assets in New South Wales.

"Aurizon has initiated proceedings to seek to preserve its rights under the ROFRA, including the right to pursue transactions which may result from the exercise of those rights or otherwise," it says.

A response has been sought from GWA, while Brookfield and Macquarie would not comment.


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