Re: And the winner is.....

[mauried@commslab.gov.au (Maurie Daly)]

In article <%ERA2.14$Pu2.546257@news0.optus.net.au> dbromage@fang.omni.com.au (David Bromage) writes:
>From: dbromage@fang.omni.com.au (David Bromage)
>Subject: Re: And the winner is.....
>Date: Wed, 24 Feb 1999 11:47:07 GMT

>John Regan (reganjd@clear.net.nz) wrote:
>> $163m - cheap I would say!  Rollingstock alone would be worth more than
>> that I would imagine.

>Not actual value, but more like replacement cost.

>The $15m loss should be easy to turn around. Tasrail was turning a profit
>in only 10 months.

>Cheers
>David


True, but Tasrail only paid $20 million for the entire operation , not $163 
million.
To turn the operation around will require not only to wipe out the $15 million 
loss , but to also pay back the bank which put up the $163 million in the 
first place .
This would require around 8% of the capital cost per annum ie some $13 million 
plus the $15 million loss just to break even, ie profit before tax of $32 
million .
Since the lease is only for 15 years , the total capital will have to be paid 
back as well in this period , ie another $10 million per year approx .
We are now up to $42 million per year.
No mean feat if you can pull it off.

Another factor going for Tasrail , is that a lot of the rail freight is bulk 
commodities like forest products and mining .
VLF has only got grain, and a fair amount of this has to be carried over ARTC 
tracks for which it will have to pay track access charges.
Tasrail doesnt pay track access charges to anyone.

MD