Aurizon to sell ECR unit for $285 mln to ease competition concerns (updated)

Aurizon Holdings

15/12/2022 22:33

(Adds further details of sale and background)
       Dec 16 (Reuters) - Aurizon Holdings  AZJ.AX ,
Australia's largest rail freight operator, said on Friday it
will sell its East Coast Rail (ECR) business to Magnetic Rail
Group for A$425 million ($284.71 million) in cash. 
    Aurizon said in a statement the sale was in accordance with
its agreement with the country's competition regulator,
following its $1.75 billion acquisition deal for One Rail
Australia (ORA) that was finalised in July 2022.
    The ORA deal is expected to help Aurizon diversify from coal
and add bulk capacity, aiding its transition to greener energy.
More than a third of Aurizon's core earnings came from coal in
fiscal 2021.
    "The (ECR) sale provides the best outcome for Aurizon and
its shareholders, delivering a strong sale price and certainty
in completing the divestment," said Managing Director and Chief
Executive Officer Andrew Harding.
    In October, a consortium including private equity firms
Oaktree Capital Management and Brookfield bid for Aurizon's ECR
operations.  urn:newsml:reuters.com:*:nL4N31J3TN 
    Sales proceeds from the ECR deal will be used to reduce
Aurizon's debt, while Magnetic Rail Group will assume ECR's
existing debt. 
    Aurizon is not expected to make any capital tax gains from
the deal, as a big chunk of it, about A$125 million will be
deferred for 12 months.  
($1 = 1.4928 Australian dollars)
 (Reporting by Navya Mittal in Bengaluru; Editing by Shinjini
Ganguli)
 ((Navya.Mittal@thomsonreuters.com;))