S&P upgrades Tranz Rail

Standard & Poor's upgraded Tranz Rail Holdings Ltd. including raising its corporate credit rating and Tranz Rail Finance Ltd.'s $74.48 million passthrough notes due June 2008 to B+ from CCC, assigned a positive outlook and withdrew the ratings.

S&P said the upgrade reflects the implicit support provided by Toll Holdings Ltd., which currently owns about 84% of Tranz Rail's shares and is bidding for the remaining minority share holding.

S&P said that although Toll is not guaranteeing the debt obligations at Tranz Rail, Toll has replaced about A$110 million of Tranz Rail's debt, Toll is beginning to integrate the management of Tranz Rail into the group's operations, Toll's equity investment in Tranz Rail is significant, and the extension of the unconditional bid indicates Toll's strong desire to achieve 100% ownership, and the Tranz Rail assets will provide Toll with the platform to develop an integrated logistics capability within New Zealand along the lines of its Australian platform.

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