LONDON — A wire service reports that shareholders in Railtrack Group PLC, operator of Britain’s railroads, voted Tuesday to sell the financially distressed business to a not-for-profit company for 500 million pounds ($780 million).
Stockholders are expected to receive between 245 pence ($3.82) and 255 pence ($3.98) for each Railtrack share once newly created Network Rail takes over Railtrack’s assets.
Railtrack’s value collapsed last October after former Transport Secretary Stephen Byers put the business into financial administration, or receivership. The company’s shares, which once traded for as much as 17 pounds ($26.52) were suspended at 280 pence ($4.37) each.
Shareholders’ fury caused a major political headache for Byers, who said when he withdrew Railtrack’s subsidies in October that there would be no government payout to investors. The outcry over Byers’ handling of the problem caused embarrassment for Prime Minister Tony Blair ( news – web sites) and contributed to Byers’ later decision to resign.
Railtrack was set up to maintain the country’s network of train tracks when the state railway system was sold off in the early 1990s. More than a dozen other private companies own and run the trains.
Critics said Railtrack failed to invest enough money in the system and blamed it for safety problems, including deadly crashes.
The Network Rail deal promises shareholders at least a partial compensation for their investment.
The vote also would result in the sale of Railtrack’s stake in the planned high-speed rail link from the Channel Tunnel to London’s St. Pancras station, for an additional 375 million pounds ($585 million).
Although 53.2 percent of shareholders voted in favor of selling Railtrack to Network Rail, a vocal minority pilloried Railtrack’s management for not fighting for a better deal.