G&W eyes a sale of global operations to Brookfield

 
  Sulla1 Chief Commissioner

G&W shares have surged on the back of a potential sale of part or the entire US$4.9-billion company to Canada's Brookfield Asset Management. Brookfield also owns the ARC rail network in Western Australia,which, ironically, was previously owned by G&W. It is possible a partial sale might be the method G&W intends to fund its move into Queensland.

https://finance.yahoo.com/news/railroad-owner-genesee-wyoming-exploring-181954825.html?fbclid=IwAR287oQ8nIPKRH5f_9mMV5_KaN_1EVjk7FZS0beZJviB3PA95z5noTFmlTI

Sponsored advertisement

  SinickleBird Assistant Commissioner

Location: Qantas Club at Mudgee International Airport
G&W would probably have to pay someone to take over their SA operation (possible exception being Adel-Darwin).
  james.au Minister for Railways

Location: Sydney, NSW
Im not sure Queensland is why this transaction is happening.  The North American ops are 85% of GW so i suspect something more about value return to shareholders at a corporate level, or other larger transactions bigger than Qld.
  Sulla1 Chief Commissioner

Has G&W got a definite contract to haul coal or something else in Queensland?
GS4
G&W has been advertising for staff in the Mackay region, so there's a contract out there - nothing has been made public though.
  Sulla1 Chief Commissioner

Im not sure Queensland is why this transaction is happening.  The North American ops are 85% of GW so i suspect something more about value return to shareholders at a corporate level, or other larger transactions bigger than Qld.
james.au


That depends on just how big the planned the Queensland operation is planned to be. Queensland produced 223-million tonnes of coal last year, and Aurizon alone hauled over 150-million tonnes of it. If G&W was to pick up, some or all of the coal produced by a major miner - Glencore for example produces over 40-million tonnes of coal in Queensland - then G&W's Queensland operations could quite easily become it largest tonnage contract, and perhaps most lucrative contract in its global operations.

To fund its $1.14-billion takeover of Glencore's NSW rail operations G&W sold a 49% equity stake to Macquarie in GWA, and that got it 30 locomotives and 894-wagons - to turn around and fund a similar or larger size operation in Queensland is going to need more fancy financing, particularly when as a global company G&W is still 20% smaller than Aurizon and operates on far thinner margins in North America, where most operations are on secondary lines with relatively few mainline hauls. All hypothetically of course - it might be starting with something far smaller and easier than coal, it is after all, a shortline operator.
  x31 Chief Commissioner

Location: gallifrey
God I hope they change out the management.
  BrentonGolding Chief Commissioner

Location: Maldon Junction
God I hope they change out the management.
x31
Maybe you could put your hand up, you seem to know how they should be running their business.

BG
  x31 Chief Commissioner

Location: gallifrey
Nah it is a dying duck in SA
  james.au Minister for Railways

Location: Sydney, NSW
G&W would probably have to pay someone to take over their SA operation (possible exception being Adel-Darwin).
SinickleBird
They've exited most of it already - not much else to take over.....
  x31 Chief Commissioner

Location: gallifrey
You give GWA a large rail company with a large international company as a customer and several years later you end up with a smaller rail company.  Anyone remember Warwick Fairfax?
  bingley hall Minister for Railways

Location: Last train to Skaville
I had a look at their 3'6" fleet and its fantastic ........ if you're a heritage railway looking for a first generation diesel.

But seriously their GWN's are their only competitive narrow gauge locos and there is only 5 of them.  I'd think it's reasonable to say you need GWN's or Siemens electrics to even have a start at hauling coal in Qld.  

Could the older locos handle the traffic currently hauled by the GWN's thus allowing the GWN's to be transferred to Qld ?  Even then 5 locos is bugger all.
GS4
It would be a greenfield operation in Qld requiring new locos and wagons

The current 3'6" fleet is suitable for the task allocated to it. The GWNs will have plenty of work to do at Whyalla with a stated increase in traffic there.
  BrentonGolding Chief Commissioner

Location: Maldon Junction
You give GWA a large rail company with a large international company as a customer and several years later you end up with a smaller rail company.  Anyone remember Warwick Fairfax?
x31
"Young Warwick" Fairfax was a spoilt little brat with no understanding of the real world of business and just a couple of degrees under his belt at 26 years of age when he did a number on Fairfax.

GWA is owned by an S&P 400 public company listed on the NYSE which can trace it's origins back over 100 years, has a market capitalisation of over USD$4.5 Billion and revenue of over USD$1.5 Billion.

When you compare the two there is no comparison.

BG
  nswtrains Chief Commissioner

You give GWA a large rail company with a large international company as a customer and several years later you end up with a smaller rail company.  Anyone remember Warwick Fairfax?
x31
Another nonsense opinion from X31. Where do you get these brain bubbles from?
  BrentonGolding Chief Commissioner

Location: Maldon Junction
I did a quick google search of G&W Australia and it is owned by 51% G&W and 49% Macquarie Group , , so if Macquarie bought 2% they should have control ... right ??

Maybe you could get a management change .....
GS4
Ah yes but G&W would have to SELL them that 2% which they would never do unless they actually wanted to cede control to Macquarie.

Standard corporate structure designed to get the most external investment possible without letting go of the reins.

BG
  bingley hall Minister for Railways

Location: Last train to Skaville
Rumours flying around fast out of the US this morning that an announcement is imminent of Brookfield as the winning suitor.
  Sulla1 Chief Commissioner

News just in has Brookfield inking a deal to purchase G&W in its entirety for just under $9-billion.
  james.au Minister for Railways

Location: Sydney, NSW
Would there be any economies of scale achievable between the below rail of GWA in SA/NT and ARC Infrastructure (eg track maintenance plant etc)?  Or would geography and distance make this a challenge?
  Sulla1 Chief Commissioner

I guess there's a possibility of that, with both being under the Brookfield umbrella...but I suspect the only significant changes will be the potential cash injections into the G&W operations. It could be good news for the Darwin line.
  8077 Chief Train Controller

Location: Crossing the Rubicon
I guess there's a possibility of that, with both being under the Brookfield umbrella...but I suspect the only significant changes will be the potential cash injections into the G&W operations. It could be good news for the Darwin line.
Sulla1

Suggests that GWA have cash issues?
  bingley hall Minister for Railways

Location: Last train to Skaville
I guess there's a possibility of that, with both being under the Brookfield umbrella...but I suspect the only significant changes will be the potential cash injections into the G&W operations. It could be good news for the Darwin line.
Sulla1

The only good news for the Darwin line would be an operator that knows how to market it properly. Brookfield ain't going to deliver that Sad

As for the point made by 8077, you don't pay US$ 9bn (or US$110 a share) for a company that has cash issues.

The Reuters story today suggest that GWI were concerned about ongoing infrastructure investment in some of its lesser (shortline) properties.

This will end up being a bad deal for rail all around. Brookfield will not be sympathetic to shortline methods of operation in the Us so there will be some line closures unless alternative buyers can be found, and I can see the last of the grain traffic disappearing from rail in South Australia for example.

Say what you like about the Borg, they were at least closer to the coalface with their operations than Brookfield will ever be.

Reuters link here https://www.reuters.com/article/genesee-wyo-ma-brookfield-asset/brookfield-clinches-9-bln-deal-to-buy-genesee-wyoming-sources-idUSL2N24107F

(Just as an example of how diverse a business Brookfield is (and therefore how far out of touch senior management will be from the realities of everyday railway operation) Brookfield just paid $4.5bn for Australian health operator Healthscope)
  james.au Minister for Railways

Location: Sydney, NSW
I guess there's a possibility of that, with both being under the Brookfield umbrella...but I suspect the only significant changes will be the potential cash injections into the G&W operations. It could be good news for the Darwin line.
Sulla1
What does the Darwin line need aside from more traffic?  Surely the infrastructure doesnt need much with current volumes?
  bevans Site Admin

Location: Melbourne, Australia
GWA would do better marketing services across the entire network and not just the line to Darwin.  The case in point about the new traffic without a spur which could deliver fuel inbound.  Then again why isn't fuel a big commodity in the Darwin line to remove stations and sidings?  Or is it?
  justapassenger Minister for Railways

GWA would do better marketing services across the entire network and not just the line to Darwin.
bevans
Coordination of interlining with other operators like PN and SCT (mostly in Adelaide, but Spencer Junction could also be considered) would be a more suitable option for doing this than GWA making the massive investment needed to stand up their own intermodal services on other routes where they would be too small. They have a major advantage in that the likes of PN and SCT would be no more interested in running on the Adelaide-Darwin route than GWA would be in stepping on their turf.

For all we know, they already do cater for interlining and promote it within the industry via their contacts with freight forwarders.

Then again why isn't fuel a big commodity in the Darwin line to remove stations and sidings?  Or is it?
bevans
Petrol and diesel come to Darwin by sea, which is far more efficient for the task than rail. Natural gas has a pipeline.

Rail is already involved in carting petrol and diesel to Alice Springs. Natural gas has a pipeline.

Outside of those destinations there wouldn't be enough volume to make rail worth it. Remember that trains are only efficient when they are cruising along carrying a large volume of freight. Since they are not a charity, GWA would pass on all the costs of stopping a train to cut out a fuel wagon at a siding in the middle of nowhere – at which point the prospective customer will give up and renew their existing deal for road haulage.

The best way for GWA/Brookfield to play a bigger role in distributing diesel to the NT interior would be to diversify their use of the rail corridor and build a pipeline for diesel fuel alongside the track.
  bingley hall Minister for Railways

Location: Last train to Skaville

Outside of those destinations there wouldn't be enough volume to make rail worth it. Remember that trains are only efficient when they are cruising along carrying a large volume of freight.
justapassenger

Bowmans Rail, Linx and a few others thank you for your input Razz
  bingley hall Minister for Railways

Location: Last train to Skaville
Internal GWA memo sighted this morning stating that Brookfield will dispose of the 51% stake in GWA by the end of 2019 "due to regulatory considerations related to Brookfield's existing rail operations in Australia".

Personally I think they would have got it past the ACCC, but they had their fingers burnt when they tried to purchase the PN business from Asciano and probably didn't want to go down that path again.

Sponsored advertisement

Display from:   

Quick Reply

We've disabled Quick Reply for this thread as it was last updated more than six months ago.