The Government has written down the value of KiwiRail's land and network assets from $13.4 billion to $6.7b and converted $322.5m of debt to equity in a major restructuring of the state-owned rail company.Michael Cullen thought the buying back of KiwiRail was the Sale of the Century and I'm thinking it was, for the seller. But Cullen was spending other people's money so he really didn't care what price was paid.
The change will hit the Budget deficit adding another $1.8b of red ink to the expected operating balance which on Budget day was forecast to be $10.6b deficit for the year to June 30.
The report continues,
They said the Government was committed to ensuring KiwiRail could fund its business on a commercial basis.Good luck with that! Just what bits of KiwiRail are commercial viable? It will be intersting to find out.
Another interesting question is, Will KiwiRail become part of the government's (partial or full) privatisation plans? I guess that Labour and the Green have nothing to fear from this since I can't see that anyone would ever want to buy KiwiRail.