FreightCorp sold for a loss - Auditor-General

In the transfer of assets to Pacific National, the loss was $70.1 million. In the transfer of certain other FreightCorp assets to the Sydney Ports Corporation, the loss was $10.2 million.

In other words, the NSW government was better off not selling FreightCorp, at least in the short term. The Auditor-General promised to comment on the benefits arising from the sale in a future report.

Among the assets sold to Pacific National were locomotive leases (Ready Power) valued at $268.6 million, but Pacific National paid only $244.2 million.

As well, NSW Treasury agreed to compensate the FreightCorp workers for no longer being employed in the NSW public sector:

• Transfer payments for non-contract employees ranging from 7.5 weeks pay for one year's service up to 30 weeks' pay for employees with six or more years' service

• Retention payments for contract employees of $25,000 per employee after three months employment and a further $25,000 after 12 months employment with the new owner

• Entitlement to a one off payment of $2,000 for surrendering their general travel passes.

Pacific National is also guaranteeing three years employment for non-contract employees.

The Enfield DELEC site was sold to Sydney Ports Corporation for $11.5 million, a book loss of $10.2 million.

The Enfield marshalling yard, valued at $43.2 million, and the Port Kembla One Spot facility, valued at $3 million, were transferred to the State Rail Authority for no cost. However, the SRA values these assets at $7.9 million, and so there was a loss of value to FreightCorp of $38.4 million.

The Auditor-General reported that FreightCorp made a profit in the year ended June 30, 2001 of $44,4 million after tax, and at that point had retained earnings of $103.9 million. After paying a dividend of $55.5 million it had retained earnings of $92.9 million.
For the period from July 2001 to February 22, 2002, FreightCorp reported a profit after tax of $14.5 million, but after the impact of the sale it had a loss of $203.5 million, and after deducting retained earnings, the NSW government took a loss of $81.3 million.

Between July 1996, when it was corporatised, and January 2002, FreightCorp made redundancy payments to 1,214 employees, at a cost of $65.1 million.