MENU

Toll Group hands over Queensland rail rights to Asciano

Toll Group (ASX: TOL) is handing over railroad rights. The transport and logistics company announced today that it has agreed to sell its own North Queensland rail service operations to Asciano‘s (ASX: AIO) Pacific National Rail.

Expected to be completed by February 2014, the move has been hailed as a further strengthening of the two corporations’ relationship and a financial boost for Toll Group. “This agreement is a very positive transaction for Toll and all of our North Queensland customers,” said Toll Group Managing Director Brian Kruger in a statement. “The deal allows us to continue to provide Toll Intermodal’s customers with long-term access to quality rail infrastructure and significantly enhances the operational flexibility of our North Queensland business. It also reduces capital employed in this part of the business, which will result in an improvement in our return on invested capital.”

The 13-year haulage agreement allows Toll to continue to service its North Queensland customers, while handing over day-to-day operations to Asciano. The two companies have extended their current interstate rail haulage agreement to 2022, and Pacific National Rail will acquire five North Queensland terminals for around $70 million.

Foolish takeaway

Toll is Australia’s largest transport and logistics company – but bigger isn’t always better. This agreement allows Toll to continue to do what it has always done, without sucking up capital that could be used elsewhere. Asciano’s newly acquired assets were sold by Toll at book value, which leaves Toll with a clean cut and Asciano without worries of overinflated investments.

The new deal also takes care of a regulatory railblock. Starting next year, new minimum rail volume obligations on Toll in North Queensland might’ve proved troublesome for the company. With ownership handed over to Asciano, Toll Group no longer has to worry about hitting its regulatory quota.

Toll Group has managed to keep dividends rolling out to investors for years - and it's not the only one. Discover The Motley Fool's favourite dividend idea for 2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2014."

Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!