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Urban rail news in brief - July 2015
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PATRICK Corporation is set to ramp up its fight against Toll
Holdings' $4.6 billion takeover bid tomorrow.
This will be only days after Stephen O'Donnell, chief of the two
warring groups' rail joint venture, Pacific National, resigned,
accusing Toll of intimidatory behaviour.
Patrick will detail its strong opposition to Toll's bid in its
Target's Statement, to be released tomorrow, as Mr O'Donnell's
resignation, tendered on Thursday and announced to staff on Friday,
leaves PN in disarray.
An arbitrator who will investigate a dispute between Patrick and
Toll over PN is also expected to be announced today or tomorrow.
The arbitrator could trigger a process that could lead to the
dissolution of PN.
Mr O'Donnell's decision to quit is also linked to this dispute,
which centres on a deal under which Toll provides services to PN's
Queensland arm, Pacific National Queensland (PNQ).
In his resignation letter, obtained by The Age, Mr
O'Donnell said his role as chief executive had become
"I have found recent threats and intimidatory behaviour by one
of the Toll directors to be completely unacceptable to me both
personally and as a professional manager," he said. Mr O'Donnell
said it was also clear that the dispute relating to PNQ and Toll
had led to an irreparable breakdown in the relationship between the
"Additionally, the aberrant behaviour by one of the Toll
employees accountable for the PNQ contract, who now refuses to
accept my termination of his secondment to Pacific National,
confirms in my mind the need to resign as CEO," he said.
Mr O'Donnell said he would stay in his position for two months
to complete his contract. "However, I would reserve my rights
should I be subject to further intimidatory behaviour by Toll," he
A Toll spokesman said yesterday the company regretted Mr
O'Donnell's resignation. "We thank him for his contribution to the
outstanding Patrick and Toll team that has built a thriving
business in Pacific National," he said.
Mr O'Donnell was appointed by PN's four-man board.
This consists of Toll managing director Paul Little and senior
Toll executive Mark Rowsthorn. Patrick's representatives are chief
executive Chris Corrigan and director of operations Allan
The arbitrator must decide whether the dispute is material,
which could trigger the deadlock procedures of PN's shareholders
agreement and lead to the unwinding of the company.
Patrick says Toll benefits from the deal, which would create a
$510 million revenue shortfall for PN over 20 years. Toll denies
this, saying the dispute is of no material significance, and
involves less than $20 million.
The arbitrator must decide within a month whether the dispute is
material. If so, there is a 14-day cooling-off period, after which
the two companies' managing directors have 30 days to resolve the
While the dispute process proceeds, the Australian Competition
and Consumer Commission is weighing up whether Toll's bid for
Patrick is anti-competitive.
The role of PN in this evaluation is crucial. The ACCC is
expected to make a preliminary decision on the bid next month. It
has rejected a proposed merger between Patrick and Melbourne-based
freight forwarder FCL Interstate Transport.
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