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Working Lunch Monday, 4 November, 2002, 16:32 GMT
Rail war chest
Railtracker workers on a line
The government's Railtrack headache may continue

A band of Railtrack shareholders is filling a war chest to finance a court battle against the government.

The Railtrack Private Shareholders Action Group (RPSAG), with 22,000 members, intends to raise more than 2m.

The chairman of the group, Andrew Chalklen, wants ministers to "answer for their actions".

Stephen Byers, the former Transport Secretary, put Railtrack into administration in October 2001. The share price then was 280p.

After months of campaigning by shareholders, the government offered a compensation package expected to result in a payout to investors next year of around 260p per share.

Fight

The biggest shareholder organisation, the Railtrack Action Group, has given up the fight for more compensation.

So have the major investment funds which hold shares and the remaining directors of Railtrack itself.

Railtrack shares
Suspended October 2001 at 280p
Shareholders currently expecting compensation of 260p per share

RPSAG is basing its continued claim on alleged "misfeasance in public office" which caused injury to the company and its shareholders.

Its contention is that Stephen Byers used administration as a cover for re-nationalising the railways.

Contributions

Mr Chalklen is writing to all 250,000 shareholders asking them to contribute 10p for each share to finance a further campaign.

Tens of thousands of letters have already been sent. The rest will be despatched this month.

He says that there is "a realistic prospect of more than an extra 3 a share", based on valuations of Railtrack's assets before administrators were called in.

RPSAG is advising shareholders that they can join the campaign for more compensation and still qualify for the 260p already on offer.

Withdrawal

Usman Mahmud of the Railtrack Action Group justified its withdrawal from the fray, saying that legal action "would not be successful without the support of management and major shareholders."

"In any case we decided the maximum award possible from a successful action would be 280p per share - the price at which they were suspended on the 7th October last year," he added.

Nevertheless, RPSAG's money-raising venture means that the Railtrack affair will remain a running sore for the new Transport Secretary, Alistair Darling.

The government's handling of the matter could still end up in court.

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