Former Tranz Rail boss fires broadside at Fay Richwhite while plotting board coup

By Nicholas Bryant

Friday 27th October 2000

TRAIN PLOTTER: Ed Burkhardt, seen here in earlier days, says Tranz Rail management has some strange thought processes

Tranz Rail's decline is "Fay Richwhite writ large, the investment banker way of doing business, spin everything off or else," says fighting former chairman Ed Burkhardt.

Mr Burkhardt got stuck into the performance of merchant banker Fay Richwhite as he revealed his plans to overthrow the board of Wisconsin Central, Tranz Rail's major shareholder.

He said he was sickened to see how Tranz Rail had gone downhill and called current management's plans to turn it around some of the strangest thought processes for running a railway he had ever seen.

"Tranz Rail is a fine railway that has not been well managed and the remedies we're seeing won't work - they're well wide of the mark," Mr Burkhardt said. As a result, Wisconsin Central Transportation Corporation's 23.75% stake in Tranz Rail could be sold within a year.

The move depends on Mr Burkhardt successfully orchestrating a major shareholder rebellion and sacking Wisconsin Central's board of directors.

And his chances look good.

Mr Burkhardt, Wisconsin Central's founder who was sacked as president and chairman 15 months ago, is understood to have big institutional investors, which hold 70% of the company's stock, on his side.

Sales of foreign holdings would be "first item on the agenda" if the takeover bid was successful, Mr Burkhardt said.

At the top of his list of Tranz Rail's current ills is the way management is wringing its hands in despair over higher fuel costs.

Had the company been well run it would have had fuel-price pass-through provisions written into contracts so freight customers bore the brunt of price hikes, he said.

Railways should fare better than other freight haulers in an era of high fuel costs because they use less fuel to move a tonne of freight from source to destination than trucks.

"If Tranz Rail is absorbing the price rises itself because they've written contracts that don't provide for it, I don't see it as a fuel price problem - it's a management problem," Mr Burkhardt said.

Fay Richwhite director David Richwhite has a seat on the board of all three Wisconsin-held companies, while his cohort at Jump Capital, Leigh Davis, is also a Tranz Rail board member.

Wisconsin Central's net income has slipped 17% in the past year, while its share value has almost halved from $US18.88 to $US10.65 a share.

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