LONDON — Troubled railway operator Railtrack Group said Friday it will return a higher-than-expected sum of cash to shareholders, following the successful sale of its non-railway assets, reports a wire service.
The company – which was put into receivership last October after a humiliating public airing of its huge financial losses and poor safety record – will give back between 252 to 260 pence per share in cash, compared to original estimates of 245 to 255 pence per share.
Railtrack Chief Executive David Harding said the sale of two of its properties – Broadgate Development and Railtrack (Spacia) Limited – helped boost the payout.
Broadgate Development, initially given a net book value of GBP31 million, sold for GBP40 million while Spacia, with a book value of GBP16.5 million, sold for GBP17 million.
Harding said the company has also had lots of interest in its remaining property portfolio.
At 0820 GMT, Railtrack shares were up 3.3% at 256.5 pence. They stood at 280 pence when the company was forced into administration, significantly lower than its 390 pence a share listing price in October 2001.
Harding said the company has now returned nearly 90% of the share’s value just before was put into administration.
BNP Paribas analyst Stephen Bowen said the return of cash is slightly higher than he had expected, making the timeframe for repayment that much faster.
“They have done a really good job of getting cash out of some assets and there’s an increasing likelihood the liquidation process will begin in October,” he said.
Railtrack is expected to complete its sale to the nonprofit Network Rail company in early October. It will update shareholders on disposal of remaining assets on October 18.
The company said it will return the first installment of cash – expected to be 200 to 220 pence per share – by early January 2003 with the balance expected before 31 December 2003.
Once all the assets have been sold and the proceeds returned to shareholders Railtrack will be delisted. The company said it expects shares will remain listed until December 27 2002.