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![]() Railhub Archive | ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() Railtrack Group plcRailtrack Group sets out sequence of events leading to administration of Railtrack plc
financial position of its Railtrack PLC subsidiary, now in Administration, and is concerned that some important aspects have been misunderstood. In particular it wishes to assert the following five points: 1. Railtrack PLC was not insolvent as of 4.45pm on the afternoon of Friday 5 October. The attached letter from Railtrack to Government sets out very clearly the events which triggered the Administration of Railtrack PLC. This letter was accepted by Government on Sunday 7 October for the purposes of its disclosure to a High Court judge to support its own application for Railway Administration. Ultimately, because Government declined to confirm Railtrack Group's ownership of the £370m cash balance and CTRL, the letter was not disclosed as permission to do so was declined by Railtrack's board. 2. The Company was not facing 'a funding meltdown' as Mr Byers is reported to have said. The financial difficulties faced by the Company broadly remained as they were at the time of Railtrack's full-year results presentation in May. Some months had been spent in conjunction with Mr Byers' officials constructing a plan for Railtrack's future financial structure. The clear impression given to Railtrack was that Government still viewed the proposal positively after a meeting together on 3 October. 3. At no time did Railtrack's Directors propose to Government that Railtrack PLC should be put into Railway Administration, nor was this possibility ever actively considered at any meeting between Railtrack and the Government. Throughout the discussions cited above, references were regularly made - both spoken and written - to the Railway Administration, renationalisation and not for profit trust options, by way of identifying all possible outcomes facing Railtrack PLC, but only in order to give both sides the opportunity to rule these options out of consideration for clear and compelling reasons. The clear impression given at the outset by the DTLR officials was that these were not realistic options; this was not contradicted in any subsequent discussions once Ministerial advice had been taken by officials. 4. Railtrack had no choice but to acknowledge on Sunday 7 October that Railtrack PLC had effectively been rendered insolvent by virtue of the Government's actions in two key respects: o The Government had made clear that no further financial assistance whatever would be available from the Government - a reversal of public policy already presaged by the non payment of £162m that had been due on October 1. o The Government had effectively removed the power of the Rail Regulator to fulfil his legislative role by undertaking a review of Railtrack's immediate financial requirements, hitherto understood by both equity and debt investors in the Company to be the statutory redress for any critical funding problems. 5. Railtrack had repeatedly warned Government officials, throughout a series of detailed discussions between July 25 and October 5, that it would need to be advised immediately if, at any point, Government decided to withdraw support (including termination of project Rainbow). Any such advice would have required Railtrack to review the need for a public announcement and would have led immediately to the preparation of other financial plans by Railtrack's management (including reductions in all non safety critical investment and a possible approach to the Regulator). However, no such advice, either explicit or tacit, was received by Railtrack at any time up until 5pm October 5. The Board welcomes the prospect of a public statement this afternoon by Mr Byers and would hope to hear him confirming his acceptance of these points and clarification of the position of the Channel Tunnel Rail Link and certain funding guarantees currently given by Railtrack PLC. - ends - [[letter follows as appendix]] Contacts: Sue Clark 020 7557 8292/3 (Railtrack) Donal McCabe 020 7557 8292/3 (Railtrack) Duncan Campbell-Smith 07774 250811 (Maitland Consultancy) All recent press releases can be found on the Railtrack web site www.railtrack.co.uk Appendix - 1 The Rt Hon Stephen Byers MP Secretary of State for Transport, Local Government and the Regions 6/B6 Eland House Bressenden Place London SW1E 5DU 7th October 2001 Dear Secretary of State I am writing to confirm that the current view of the Chairman and the Executive Directors of the Company is that the financability of Railtrack has been materially and adversely affected by: a) the notification by Government on Friday 5th October 2001 at 4.45pm that it is not prepared to advance any additional funds over and above those countenanced within the Regulatory settlement; b) the Government's action in holding back monies due under the previously agreed Renewco arrangements as well as the Government's recent statement to Railtrack that it is unable/unwilling to proceed with the Renewco financing arrangements; c) the public impact of the press and TV coverage of the Government's stated intention to put Railtrack into Administration and the effect this will have on Railtrack's ability to raise finance in the short and medium term. In these circumstances, in the opinion of the Chairman and the Executive Directors of Railtrack, it will be extremely difficult to draw on the Bridging facilities available to it or to access the public bond markets in the short or medium term. The impact of this is to pose an immediate difficulty in drawing down on funds from the beginning of next week and, most importantly, the prospects of refinancing those drawings and our other liabilities, such as to our bondholders, when they mature. The markets had previously relied upon Government support for and financial backing of the Company, which is now publicly not forthcoming. Without that support, there is no realistic prospect of raising further finance and refinancing our existing commitments. Furthermore, we have reached the view that delay in the appointment of an administrator, in accordance with the Government's statement that this is what it intends to do this weekend, would at this stage result in severe operational problems for the Company, given the uncertainty caused by these matters now in the public domain since Friday. For example, the 6,000 signallers who operate the country's rail network will need to believe that they will continue to be paid now and for the medium term future, which assurance the Company cannot give without Government support. I further confirm that the Company waives the requirement contained in rule 2.6 of the Railway Administration Order Rules 2001 for service on it of the petition for a railway administration order and supporting evidence. As far as we are aware (a) there is no security granted by the Company which has not been submitted for registration at Companies House; and (b) there is no petition or resolution outstanding for the Company's winding up. In reaching this conclusion, the board has been mindful of the Railways administrator's statutory duty to manage the Company in a manner which protects both the interests of creditors and, as importantly, members of the Company. Yours sincerely JOHN H ROBINSON
Railhub Archive ::: 2001-10-15 RTK-001 | ![]() ![]() Monday![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() 14 stories ![]() ![]()
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