Sell-off windfall for 11,000 Railtrack staff

Privatisation windfall for Railtrack workers

RUSSELL HOTTEN

Almost 11,500 Railtrack employees are in line for a windfall in May after the Government announced it was pressing ahead with the company's pounds 2bn privatisation, despite fierce opposition.

Private investors will get at least 30 per cent of the shares and are being promised special discounts, which the Government hopes will ensure the success of one of its most important privatisations yet.

The Government had said it aimed to sell Railtrack, whose chairman is Bob Horton, during spring 1996, and yesterday Sir George Young, transport secretary, published outline details of the timetable.

As with last year's sale of shares in PowerGen and National Power, the public offer will only be conducted through Share Shops, run by banks, building societies, stockbrokers and other financial firms.

The sell-off will be preceded by a pounds 4m marketing campaign in March, when key financial details will be released. As with past privatisations, private investors will be able to pay for their shares in two instalments.

Shares offered to the public will be priced at a discount to those for city institutions, and there will be special incentives for Railtrack employees, including free shares worth pounds 160. They will also be entitled to pounds 2 of shares for each year of service, plus two free shares for every one bought, up to a maximum value of pounds 250.

City firms will tender through a separate offer in which they will have to bid for shares before knowing the final price. Despite Labour threats to de-rail the sale of Railtrack, which owns the track, signalling and stations, the Government is keen to secure the sale before the next election. Analysts expect it to raise about pounds 2bn, which could provide tax cuts.

The Labour Party's transport spokesman, Brian Wilson, said he would secure support from MPs of all parties to oppose the sale. "Nobody should be in any doubt about Labour's commitment to retaining the railway infrastructure in public ownership and with full public accountability," he said.

"Anyone who invests in Railtrack, in the death days of this government, will be under no illusions about Labour's position. It is a high-risk prospectus and there are certainly going to be no rich pickings for those who get involved.

"There is no future for investors in supporting the utterly unwanted sale of Railtrack."

SBC Warburg, financial adviser to the Department of Transport, would reveal nothing about Railtrack's prospective value or price. Railtrack Group Plc, as it will be known, owns 23,000 miles of track, 2,500 passenger stations, 1,000 tunnels and 90,000 bridges.

Three rail-equipment leasing companies have already been sold and three freight companies are still up for sale.