Save Search

Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Tuesday, 28 May 2002
Page: 2536


Mr Martin Ferguson asked the Minister for Transport and Regional Services, upon notice, on 13 February 2002:

(1) Which business, legal and probity advisers evaluated and oversighted the tender process for the sale of FreightCorp and the National Rail Corporation Limited, and what was paid to each adviser for their service.

(2) What criteria were used in the tender evaluation process in meeting the Governments agreed objectives for the combined sale and what were the agreed objectives.

(3) Who were the bidders, what were their initial bids and were there any changes in the bids during the tender process as a result of the evaluation process.


Mr Anderson (Minister for Transport and Regional Services) —The answer to the honourable member's question is as follows:

(1) Up until December 2001 the former Commonwealth Office of Asset Sales and Commercial Support (OASACS) managed the sale of National Rail Corporation (NRC) on behalf of the NRC shareholders. After that date, the Commonwealth Department of Finance and Administration conducted management of the sale.

The Department of Finance and Administration advises that OASACS appointed Macquarie Bank Limited, Blake Dawson Waldron, and Sparke Helmore as business, legal, and probity advisers respectively to the sale process.

The Department of Finance and Administration also advises that since the combined sale of NRC and FreightCorp (FRC) was announced on the 24 August 2001, the following amounts have been paid to the legal, business & probity advisers:

Consultant

Purpose of Consultancy

Amount paid since 24 August 2001

Selection Method

Justification

Blake Dawson Waldron

Legal Advice

$1,871,488.00

Select Tender

Specialist Expertise

Maquarie Bank Limited

Business Advice

$3,115,390.00

Select Tender

Specialist Expertise

Sparke Helmore

Probity Advisory Services

$179,217.00

Select Tender

Specialist Expertise

Total

$5,166,095.00

Please Note: The amounts shown do not include invoices that have not been submitted for payment at the time of answering this question.

(2) The Shareholder's (Commonwealth, NSW and Victoria) objectives for the sale were:

(a) to develop a commercially sustainable and competitive freight business, able to contribute to an efficient, competitive and viable domestic freight transport industry, recognising the inherent environmental benefits of rail transport;

(b) to ensure quality freight services to customers in regional and rural Australia;

(c) to ensure the sale process treats FreightCorp (FRC) and National Rail Corporation (NRC) employees, respectively, in a fair manner, including through the preservation of accrued entitlements;

(d) to divest FRC and NRC as soon as reasonably practicable in accordance with appropriate standards of probity;

(e) to terminate, to the extent possible, the continuing responsibilities of the Shareholders consistent with each government's responsibilities and minimise any post sale residual risk and liabilities; and

(f) having regard to the above objectives, to maximise the net sale proceeds and achieve satisfactory financial outcomes for each Shareholder.

The evaluation criteria that were applied by the evaluation committee, against the Shareholder governments' sale objectives, are set out below:

Criterion 1. Bidder's demonstrated capability and commitment to operate and invest in a commercially viable national or large scale transport business, and contribute to the development of a competitive domestic freight transport industry.

Criterion 2. Bidder's demonstrated capability and commitment to the development of an efficient and viable rail freight business which ensures quality freight services to customers in regional and rural Australia.

Criterion 3. Bidder's demonstrated financial capability to acquire both FRC and NRC together.

Criterion 4. Viability and credibility of the Bidder's business plans over a forecast period of not less than 5 years, including the extent to which the Bidder has minimised any potential for cross-subsidisation between the interstate and bulk rail freight businesses.

Criterion 5. Bidders ability to complete the sale within the required timetable and to achieve a smooth transition of the business.

Criterion 6. Bidder's ability to accept and comply with the conditions of the tender process, including any regulatory or other legal requirements.

Criterion 7. The extent to which the Bidder's Tender has minimal conditions and minimises amendments to the sale documentation, which would have the effect of increasing risk to the Vendors.

Criterion 8. The extent to which the Bidder's Tender addresses the Vendors' objective for the treatment of FRC and NRC employees, respectively, in a fair manner, including through the preservation of accrued entitlements.

Criterion 9. The extent to which Bidder's Tender maximises net sale proceeds to the Vendors, adjusted for any quantifiable residual risks and liabilities which would remain with or be assumed by the Vendors.

Criterion 10. The extent to which the Bidder's Tender meets the Vendors' conditions for the sale.

(3) The Commonwealth Department of Finance and Administration advises that following a competitive tendering process and a comprehensive evaluation, FreightCorp and National Rail Corporation Limited were sold to National Rail Consortium Pty Ltd for a total transaction value of $1.172 billion.

Two other bids were received by the evaluation committee, one from Freight Australia Consortium (an Australian rail freight operator) and Australian Railroad Group (an Australian rail freight operator jointly owned by Wesfarmers and Genesee & Wyoming). The bid from National Rail Consortium was evaluated as best meeting the governments' agreed objectives for the sale.

The Department of Finance and Administration also advised that there were no changes to bids during the tender process as a result of the evaluation process.