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Chief Executive of Railtrack, Steve Marshall
Chief Executive of Railtrack, Steve Marshall

BBC BREAKFAST WITH FROST INTERVIEW:

STEVE MARSHALL CHIEF EXECUTIVE OF RAILTRACK OCTOBER 14TH, 2001

Please note "BBC Breakfast with Frost" must be credited if any part of this transcript is used

DAVID FROST:

Now last week has the world learned of the bombing raids in Afghanistan the Transport Secretary Stephen Byers announced that Railtrack was to be placed into administration. The news was met with approval from some commuters and dismay from the shareholders and the City, and anger by the man who's joining me right now for his first sit-down television interview since Railtrack was, as he put it, renationalised by the back-door, it's the company's Chief Executive Steve Marshall. Good morning Steve.

STEVE MARSHALL:

Good morning to you.

DAVID FROST:

Your words earlier in the week "shoddy and unacceptable" the government's treatment of Railtrack, are you still feeing the same way?

STEVE MARSHALL:

More so.

DAVID FROST:

More so?

STEVE MARSHALL:

What ever your views about Railtrack are, and views vary on it of course they do, the fact is that the way the government has done this is unacceptable in all respects. It's not fair to our shareholders, they have snatched the company from them and it's certainly not fair to our employees, you know 90 per cent of our people own our shares and it's not fair to a quarter of a million ordinary people who own those shares and many times that number through their pension funds, it's plain wrong.

DAVID FROST:

Did you have any hint of what was coming?

STEVE MARSHALL:

Absolutely none and the way it was done, with an ambush on the Friday night, with no ability to even appeal to the Rail Regulator because he was already sorted out before our chairman was notified, basically gave the company no options at all, we didn't get the chance to do a plan B.

DAVID FROST:

And in fact the situation is that minutes before that meeting on Friday night you had £3 billion of debt or whatever, but you were not a bankrupt company at that point¿

STEVE MARSHALL:

We were not bankrupt¿

DAVID FROST:

And you wouldn't have been bankrupt if you'd had the £1.5 billion that you'd been promised by John Prescott in April, yes?

STEVE MARSHALL:

The money that was promised in April was not forthcoming, the government also said it wouldn't provide any additional support, it had also previously contacted the Rail Regulator and said if you try and do anything we'll put legislation through Parliament, if that isn't a mugging I don't know what is.

DAVID FROST:

Now during the week it seemed that the shareholders were going to get something?

STEVE MARSHALL:

Yes.

DAVID FROST:

Up to 70p a share, yes?

STEVE MARSHALL:

And we're still very hopeful on that and on the Channel Tunnel.

DAVID FROST:

Right, and the £370 million provides 70p and how much, explain just for people about the Channel Tunnel rail link and why that's worth £400 million?

STEVE MARSHALL:

The company that's in the, now in administration is the, the national network, but our parent company, Railtrack Group has £370 million of cash in it, 70p a share as you say, and also has the rights to the Channel Tunnel rail link, section one. But government have to actively cooperate with us to enable us to secure the value to those Channel Tunnel rights and that's very much what we're hoping and expecting to hear from Mr Byers on Monday.

DAVID FROST:

So you are confident, you're confident that that £400 million will be Railtrack's?

STEVE MARSHALL:

Certainly pretty confident and determined indeed that that becomes so.

DAVID FROST:

Can you really make it happen legally if Mr Byers was to say no?

STEVE MARSHALL:

No we definitely need government cooperation to secure that, we met with Mr Byers on Friday and he indicated that he hoped to be able to respond positively on Monday.

DAVID FROST:

That must have been a rather jittery, edgy metting?

STEVE MARSHALL:

It was workmanlike, there was no point in, in that meeting looking backwards, our intention was to secure value for our shareholders from Channel Tunnel. Once that has been secured there is a much broader discussion that will not go away, how do we get to £3.60.

DAVID FROST:

Yes, that's what you feel the shareholders deserve?

STEVE MARSHALL:

As a minimum.

DAVID FROST:

And the reason for that?

STEVE MARSHALL:

The reason for that is that that is broadly what shareholders would have got if you take the privatisation price and apply a standard bond rate of return to it, less all dividends paid.

DAVID FROST:

And how are people working this week, I mean is it a ghost town or is it just business as usual, has it been?

STEVE MARSHALL:

Our job is to make it as business as usual as we possibly can, but you know you have to understand, we've got 12,000 people in Railtrack and many tens of thousands more who are our contractors and train operators and they have worked like dogs over the last 12 months to get the network back and they've made huge progress. Ninety per cent of them have seen their shares disappear on them, some of them, some signallers, £20,000, £30,000 of life savings were in Railtrack, how do you think they feel.

DAVID FROST:

And is there anything they can do, well there's various people planning legal actions, aren't there?

STEVE MARSHALL:

Sure.

DAVID FROST:

But the small shareholders and a group of the big shareholders also planning¿

STEVE MARSHALL:

Indeed¿

DAVID FROST:

legal action, right?

STEVE MARSHALL:

Indeed and all of those are underway but whilst all that's going on the best thing we can all do is keep the network running as best we can for the public, that's our job as well.

DAVID FROST:

To what extent Steve, you've been Chief Executive for about a year now?

STEVE MARSHALL:

About a year.

DAVID FROST:

To what extent are Railtrack's problems though self-inflicted, I mean it became one of the most unpopular companies in Britain¿

STEVE MARSHALL:

Sure¿

DAVID FROST:

And that was partially self-inflicted presumably?

STEVE MARSHALL:

Railtrack has made mistakes, I've never made any bones about that, but the privatisation inheritance was really very, very difficult, I don't think any investor could reasonably have understand the real nature and state of the network at that stage and a Rail Regulator was appointed who has made it very difficult for the company to make progress and clearly there are risks around the major projects. Life is full of risk but at the end of the day it would be very difficult for a shareholder to have really known the risks they were running and let's not forget the network has grown by 35 per cent, there have been some huge successes as well.

DAVID FROST:

And of course the other thing is that the, that the things like the rails, some of the basic structure of Railtrack was in a worse state than anybody knew¿at the time of the privatisation?

STEVE MARSHALL:

Absolutely and as I said on Monday a 40-year-old piece of rail doesn't actually care if it's replaced by a public-private partnership or whatever it's replaced by, but it needs replacing and one way or another the cash will have to be found to upgrade this network and the public deserve that.

DAVID FROST:

How much, how much of the blame goes to the botched up nature of the privatisation?

STEVE MARSHALL:

A significant chunk but there are other matters as well. The biggest concern that Railtrack had as we embarked on our talks with government was whether the Rail Regulator would in fact be prepared to come up with the additional money to invest directly into the track and that was one of the key things that led us to seek discussions. But we mustn't lose sight of the fact that the government chose to pull the rug under us, there were other options, we weren't given the chance to pursue them, it's like a python coiling itself around your windpipe and just as your last breath is going to be squeezed out of you the python turns to you and said 'well it's not my fault guv, I think you probably would have died anyway'. Well you know with respect to the python I think we should have been given that chance.

DAVID FROST:

Steve thank you very much indeed.

STEVE MARSHALL:

Thank you.

DAVID FROST:

Thank you very much indeed, very clear.

END


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