LONDON — The Wall Street Journal Online reports that Railtrack Group PLC said Thursday it agreed to a takeover of its rail network ( news – external web site) by state-backed nonprofit firm Network Rail.
Railtrack, which was placed into administration last October, said shareholders will receive between 245 pence and 255 pence ($3.74 and $3.89, or 3.81 and 3.96 euros) for each of their shares after the company is dissolved, compared with the 280 pence each share was worth before the company collapsed last year.
Trading in Railtrack shares resumed Thursday in London for the first time since October. They fell 50.5 pence, or 18%, to 224 pence apiece.
Railtrack was created when the former Conservative government split and privatized British Rail in the 1990s. Critics accused Railtrack, which had responsibility for train tracks, signaling and stations, of failing to invest enough in the system, and blamed it for safety problems, including several deadly crashes.
The government’s decision to place the company into administration last fall was applauded by frustrated passengers but left shareholders fearing their shares — once worth as much as 17 pounds apiece — would be worthless.
Railtrack said Thursday that it agreed to sell its core rail-infrastructure business to Network Rail for 500 million pounds ($762.9 million or 776.9 million euros).
Railtrack also announced that it agreed to sell its interest in a rail link from London to the Channel tunnel for 295 million pounds to London & Continental Railways Ltd, and rights to operate the link and London ‘s St. Pancras Station to Network Rail for 80 million pounds.
Shareholders will vote on the proposals at an extraordinary general meeting on July 23 .
One shareholder representative said Thursday he is not impressed with the offer. “We shall have to study today’s announcement but we are still very much opposed to the offer and will vote against it at the EGM,” said Andrew Chalklen, chairman of the Railtrack Private Shareholders Action Group.
Railtrack Group said the offer was the shareholders’ best bet. “The board realizes that the administration order has been detrimental to the interests of shareholders. However … the board has to be realistic about the options available,” the company said.
Railtrack said that, if shareholders approved the deal, they could expect the first payment, of between 160 pence and 180 pence, in January 2003 . They also are free to sell their shares.
The company said that if the disposals proceed it will waive its right to pursue litigation against the government over the administration of Railtrack.
Separately, Network Rail said it has agreed with a committee of Railtrack bondholders that it will repay Railtrack’s outstanding bonds early. It also said it has negotiated a nine-billion-pound short-term bridge facility to acquire Railtrack, refinance existing Railtrack debt estimated at 7.1 billion pounds at the end of July, and fund operations.