Subjection the annual report to a word search for “Greentrains”...

Subjection the annual report to a word search for “Greentrains” and “Orange” tells us that:

1. Orange Grove Brickworks Pty Ltd (OGB) is a minor shareholder in Greentrains Pty Ltd, and OGB is the trustee of Orange Grove Brickworks Family Trust. Michael Coote is a director of OGB, but he is neither a shareholder in OGB nor a beneficiary of the trust.

2. OGB is the 16th largest shareholder with 1,073,464 shares.

3. OGB rents two properties to CXG for an annual rental of $550,000 + $150,000.

4. Subject to certain conditions Greentrains Pty Ltd bought locomotives and wagons from CXG for some $82.7 million. Ownership in the equipment passes on payment. CXG thinks that the $82.7 million should “probably” be paid at the end of October 2008. [The “conditions” and the payment terms might, or might not, be too generous.]

5. Gemco Leasing Pty Ltd has entered into an operating leasing agreement with Greentrains Pty Ltd for the provision of locomotives and wagons on commercial terms for a period of five years at a rate of $9.4 million a year. These locomotives and wagons are in turn offered to Gemco Rail’s existing customers on operating lease “dry” hire terms.

It looks like CXG is helping Greentrains to set up a business that CXG could enter into in its own right if it had the funds. If Greentrains has a pile of cash to invest, then this would make sense for CXG, because its debt situation is too tight for new adventures.

I can think of good-for-CXG reasons for the above tranactions, but I can also dredge up sinister reasons.