WELLINGTON, New Zealand, Dec. 17 /PRNewswire/AsiaNet/ -- Tranz Rail Holdings Limited (NZSE: TRH.) (Nasdaq: TNZRY) announced today that Moody's Investors Service has assigned a Prime-2 rating to Tranz Rail Holdings Limited and rates the Pass Through Certificates of Tranz Rail Finance Limited as Baa1. Shares of Tranz Rail Holdings Limited are publicly traded on the New Zealand Stock Exchange under the symbol TRH and the US American Depository Shares (ADS) of the Company are traded on the NASDAQ National Market System under the symbol TNZRY (each ADS is equivalent to three (3) shares). The Company is the leading multi-modal freight transport and distribution company in New Zealand and operates the only commercial railroad providing freight and passenger services utilizing 3,900 route kilometers (2,400 miles) of track, approximately 360 locomotives, 6,700 wagons (freight cars), 130 carriages (passenger railcars), 170 self propelled passenger railcars, 2,600 shipping containers and three roll-on-roll-off rail ferries between the North and South Islands. Please refer to the attached media release from Moody's Investors Service, for further information: MOODY'S ASSIGNS PRIME-2 RATING TO TRANZ RAIL HOLDINGS LIMITED; RATES PASS THROUGH CERTS OF TRANZ RAIL FINANCE LTD. BAA1 NEW YORK, Dec. 12 -- Moody's Investors Service assigned a Prime-2 short term rating to Tranz Rail Holdings Limited ("Tranz Rail"), which plans a New Zealand dollar commercial paper program. In a related action, Moody's assigned a Baa1 rating to the approximately $74.5 million Tranz Rail Finance Limited Pass Through Certificates, Series 1996, with the rating based on an unconditional guaranty of the underlying payments by Tranz Rail Limited (the wholly owned subsidiary of Tranz Rail which conducts virtually all of the commercial operations) and the pass-through nature of the trust. This is the first time that Moody's has rated the securities of Tranz Rail, Tranz Rail Finance Limited or, Tranz Rail Limited. The ratings reflect Tranz Rail's position as the only operator of commercial rail service in New Zealand and the importance to the country of effective rail transport, the operating benefits from a well organized privatization and a moderately leveraged capital structure. Moody's expects alternative liquidity, including a multi-year Cash Advance Facility, will be adequate to support the issuance of commercial paper. Tranz Rail was formed in 1993 by a consortium, including the Wisconsin Central Transportation Corporation ("Wisconsin Central") and a number of financial partners, to purchase the former New Zealand Rail from the New Zealand government. Over the prior decade, the government implemented a number of operating programs designed to make its freight transport operations more commercially oriented with the objective of transferring ownership to the private sector. These restructuring programs (which included, reduced head count by over 75%, closed low density lines and retired uneconomic rolling stock, and a change in attitude towards customer service) produced significant productivity improvements and solid operating profit at the time of the privatization. Following the purchase, the Wisconsin Central led consortium introduced its management philosophy, which emphasizes superb customer service and high employee productivity, and accelerated certain existing programs including upgrades to the track and signaling systems as well as expanded fleet utilization. Consequently, Tranz Rail's operating ratio and other key operating statistics have improved to levels approaching those of the North American Class I railroads, and Moody's expects continued modest improvement in operating efficiency over the intermediate term. Tranz Rail integrates a network in New Zealand of approximately 2,400 miles of track and 350 freight locomotives, 500 owned or operated trucks, and three roll-on roll-off rail ferries as the country's largest multi-modal transport provider. Approximately 70% of Tranz Rail revenue is from rail freight with the balance split between inter-island ferry and passenger rail service. Agricultural, Food and Forest Products are expected to comprise the bulk of the future freight volume and are export oriented commodities which require a reliable internal rail network to move the goods to port in a timely manner. Tranz Rail is the only sizable operator of rail service in New Zealand, and Moody's anticipates the company will continue to gain market share versus trucking through continued service improvements as well as the limited capacity of New Zealand's highway network. Since the privatization, Tranz Rail improved its capital structure through profit retention and a global equity offering during 1996. Although increased capital spending levels are planned, principally for new ferries and wagons and upgrades to the track, Moody's anticipates that Tranz Rail will maintain prudent financial policies with relatively strong debt protection statistics over the intermediate term. As Tranz Rail is expected to remain substantially exposed to the overall New Zealand economy with limited top-line growth, Moody's anticipates the company will explore opportunities from rail privatization programs outside of New Zealand such as its recent investment in Tasrail -- a small line in Australia. Moody's expects that any such investment would only be in conjunction with a consortium of other experienced investors. While Tranz Rail's share would add an element of financial and operating risk to the company in the near term, a moderately sized investment could be accomplished within the current rating. Tranz Rail, incorporated in New Zealand under the Companies Act 1993 with headquarters in Wellington, operates the only rail network in New Zealand providing freight and passenger service, as well as inter island ferries and a fleet of trucks. SOURCE Tranz Rail Holdings Limited -0- 12/17/97 /CONTACT: Mr. Ronald G. Russ, Executive Manager and Chief Financial Officer of Tranz Rail Holdings Limited, Domestic, 04-498-2099, International, 644-498-2099, Fax: 644-498-2014; or Michael Mulvaney, Managing Director, Industrials Group, or Robert Jankowitz, Vice President - Senior Analyst, Industrials Group, both of Moody's Investors Service, New York, Journalists: 212-553-0376, or Subscribers: 212-553-1653/ (TRH. TNZRY)