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Monday, 15 October, 2001, 14:05 GMT 15:05 UK
Railtrack set for Chunnel deal
Transport secretary Stephen Byers is expected to offer the Railtrack Group the right to run the Channel Tunnel rail link - providing a boost for out-of-pocket shareholders.


Labour have seriously mismanaged implementing a policy which appears to have been months in the planning. It is hardly the best start to restoring public confidence in the railways

Don Foster, Liberal Democrat transport spokesman
The decision would mean that investors might get an extra 75p per share.

The licence to run Phase One of the rail link - the rest of the work has already been awarded to other contractors - is estimated to be worth about 400m, and is held by Railtrack Group, the parent of Railtrack plc.

It is Railtrack plc, responsible for the UK's track, stations and signalling, which is in administration, and not the Railtrack Group.

Mr Byers is expected to inform Railtrack Group of his decision in a letter to be delivered today.

He is also due to make a statement to parliament on Monday afternoon, in which he will outline plans for the company that will replace Railtrack.

'Very positive noises'

Meanwhile, the train operating companies, such as Stagecoach and National Express, expect to be given a bigger role in track maintenance under Railtrack's replacement.

George Muir, chairman of the Association of Train Operating Companies told BBC Radio 4's Today programme Mr Byers had "made very positive noises" about the future of the railway and was anxious to consult the train companies about future developments.

Transport Secretary Stephen Byers
Stephen Byers is likely to make his offer in a letter
In a separate statement on Monday to the House of Commons, Mr Byers is due to outline details of Railtrack's replacement.

He wants it to be a not-for-profits company while also giving some control to train operators.

The option of selling Railtrack remains available, however, as administrators Ernst & Young made clear.

But the process of preparing information for interested parties - let alone actually talking to bidders - is likely to last until well into next year.

"We are not going to get this sorted out this side of Christmas," a spokesman said.

"There is no information pack or anything being prepared by the administrators at this stage that they would give to potential bidders."

Shares plummeted

Government confirmation of the rights would ensure some value remained in Railtrack shares, which FTSE index chiefs wrote off last Monday at 0p.

But even if Railtrack shareholders were to see their investments increase by 75p per share this still falls far short of the 3.60 that Railtrack says they deserve.

Shareholders have launched an action group to protect their interests.

Simon Haslam, one of the leaders of the action group, said: "If we don't hear positive noises from the government then we will consider the opportunity to take legal action against the government to make sure all the shareholders are fairly treated."

He said he wanted to make sure shareholders did not lose out when Railtrack's assets were transferred into the new, replacement company.

The government has been called upon to abide by a deal giving Railtrack rights over the Channel Tunnel Rail Link.

Talking to buyers

Mr Byers criticised Railtrack on Friday for the fact that no official stock exchange announcement had been released ahead of administration proceedings.

In contrast he said that the Department of Transport had operated "strictly within legal procedures".

Railtrack's administrators have already said that they have begun talks with interested buyers.

Any buyer would be obliged to take on 3.3bn of Railtrack debt, the government said.

The Conservatives meanwhile are calling on the government to hold an inquiry into the collapse of Railtrack.

'Botched handling'

Meanwhile, the Liberal Democrat transport spokesman Don Foster accused Mr Byers of "botching" the placing of Railtrack in administration.

"It is the right decision to turn Railtrack into a public interest, not-for-profit. It will ensure that no more taxpayers' money goes to shareholders.

"At last, the obscene conflict between shareholder profit and passsenger safety is at an end."

But he added: "Botched Tory privatisation has been followed by botched Labour administration.

"The Transport Secretary should have followed a clear process to turn Railtrack into a public interest company.

"Instead, he has created more confusion over who is in charge of what and what belongs to who.

"Labour have seriously mismanaged implemeting a policy which appears to have been months in the planning.

"It is hardly the best start to restoring public confidence in the railways."

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 ON THIS STORY
The BBC's Simon Montague
"The first part of the high speed rail link is three-quarters built"

Key stories

Background

Safety crisis
 VOTE RESULTS
Should Railtrack's shareholders be compensated?

Yes
 33.04% 

No
 66.96% 

4719 Votes Cast

Results are indicative and may not reflect public opinion

See also:

15 Oct 01 | UK Politics
Byers faces resignation demand
14 Oct 01 | Business
Pressure grows for Railtrack inquiry
11 Oct 01 | Business
German bank 'eyes UK rail network'
11 Oct 01 | Business
Railtrack pushes for rail link deal
09 Oct 01 | Business
Profile: The Railtrack salvage squad
15 Oct 01 | Business
Railtrack: What happens now?
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