Railtrack set for reincarnation

Network Rail has pledged to put customers first

The administrators of Railtrack are poised to sell off key assets and give birth to the new firm that will take control of the UK's crippled railways.

Railtrack Group is set to hand over the railways to a new state-backed firm called Network Rail for £500m.

It is time for a fresh start for the rail industry

Ian McAllister
Network Rail

It is also tipped to offload phase one of its high-speed Channel Tunnel rail link for £295m.

Following the sell-off, shares in the remnants of the Railtrack Group are likely to be re-listed on the London stock exchange.

That will give investors the first chance to sell their stock since Railtrack was forced into administration by the former Transport Secretary Stephen Byers last October.

Priority for passengers

Network Rail has promised the new company will be "dedicated to the interests of rail users".

Unlike Railtrack, any profits will be ploughed back into the business rather than being split between shareholders as dividends.

This is an opportunity to endorse a better way of working

Ian McAllister

And management incentives will be tied to performance targets such as safety and punctuality rather than profits.

"It is time for a fresh start for the rail industry," said the new company's chairman Ian McAllister.

"This is an opportunity to endorse a better way of working, bringing the industry together for the benefit of all rail users."

Network Rail is in the final stages of negotiating with a syndicate of banks for a £9bn bridging loan, and will take on £6.5bn of Railtrack debt.

And, according to a Sunday press report, the government will then provide a further £10bn as a back-up.

Back to market

Sources say shares in the remnants of Railtrack will be re-listed at a price of about 250p.

That's the same amount as the compensation being offered to shareholders.

And it is 30p below the price when Mr Byers pulled the plug on the troubled firm.

Railtrack shares once soared to £17 before beginning the steep decline that ended in administration following a series of train crashes.

Railtrack will be little more than a shell following the sell-off of its assets, and is likely to be liquidated before the end of the year.

The two deals are subject to approval by Railtrack shareholders at a general meeting expected in July.