Railtrack in administration

Railtrack has debts of about £3.3bn

Railtrack, the company that controls Britain's rail infrastructure, has been put into administration.

The government asked the High Court to take the action after it refused to put any more money into the struggling company.

Our action today will see the end of Railtrack. In my judgment, time had come to take back the track and put the interests of the travelling public first

Stephen Byers, Secretary of State for Transport

The order means Railtrack is now under the control of government-appointed administrators, who will continue to run the railways.

Railtrack's shares will now be suspended, with the company's hundreds of thousands shareholders expected to get little, or possibly none, of their money back.

No job losses are expected at Railtrack, and rail services will be unaffected.

Rise and fall of Railtrack

1996: Privatised. Shares cost £3.80

Sep 1997: Southall crash kills seven

Oct 1998: Shares hit high of £17.68

Oct 1999: Ladbroke Grove crash kills 31

Nov 1999: £1m a day profits

Oct 2000: Hatfield crash kills four

May 2001: Posts first loss - £534m

June 2001: Accused of "lamentable failure" in Ladbroke Grove report

June 2001: Boss Gerald Corbett leaves

July 2001: New chairman John Robinson apologises for "appalling" year

October 2001: Placed into administration

The court was told that the company needed £700m in funds by December, rising to £1.7bn by next March.

The Transport Secretary Stephen Byers said he had turned down Railtrack's pleas for more money.

"For Railtrack, there will be no bail-out, no last-minute rescue deal paid for by the taxpayer," he said.

"Our action today will see the end of Railtrack. In my judgment, time had come to take back the track and put the interests of the travelling public first."

New approach

It is expected that Railtrack will be restructured into a non-profit making trust, where profits are reinvested rather than given to shareholders.

Railtrack's chairman John Robinson is expected to chair the new company, with the remaining directors chosen by the Strategic Rail Authority (SRA).

Mr Byers hinted that reform in the rail industry could spread beyond Railtrack.

"This is only one part of a fundamental restructuring of the rail industry."

"I intend to rationalise the present system of regulation to provide a more united approach, with stronger strategic direction while stopping the day-to-day interference in the industry."

Railtrack said it had no option but to accept Mr Byers' action.

"The directors regret that the government felt compelled to take this action and to withdraw its support which has been fundamental to the financial viability of the group since privatisation," the company said.

Losing out are thousands of small private investors.

The company has about a quarter of a million shareholders. and the vast majority of them - some 254,000 - hold less than 5,000 shares, controlling about 17% of the company.

'No hope'

Railtrack was a successful company in its first years of operating, but things started to go wrong in late 1999.

First came the Ladbroke Grove rail crash, which led to recommendations that billions of pounds be invested in safety systems.

This was followed in October last year by the Hatfield crash, which was caused by a broken rail.

Chairman John Robinson is expected to chair the new company

That threw the UK rail network into chaos for months as tracks were repaired up and down the country, and led to the collapse of the company's share price.

Meanwhile the cost of modernising the West Coast mainline between London and Glasgow has rocketed, with the bill now standing at £6bn.

Experts say Railtrack had "no hope" of raising the money needed to pay for the planned expansion of the railways.

It means the government's target of carrying 50% more passengers in 10 years time cannot be achieved unless drastic action is taken.