Railtrack Group PLC

Suspension of shares: Government appointment of administrator to Railtrack plc
_______________________________________________________________

date 7 October 2001
source Railtrack Group PLC
type Stock Exchange notice

note RNS Number:2501L

RAILTRACK GROUP PLC ("RAILTRACK GROUP")

SUSPENSION OF SHARES

GOVERNMENT APPOINTMENT OF ADMINISTRATOR TO RAILTRACK PLC


KEY POINTS

o ADMINISTRATORS APPOINTED FOLLOWING REMOVAL OF GOVERNMENT FINANCIAL
SUPPORT

o FUNDING AVAILABLE TO ENSURE OPERATION OF RAIL NETWORK

o SAFETY WILL RETAIN ITS EXISTING PRIORITY

o RIGHTS OF RAILTRACK PLC EMPLOYEES UNAFFECTED BY ADMINISTRATION

o TRADING OF SHARES SUSPENDED

o DIRECTORS WILL PURSUE ALL MEANS AVAILABLE TO ENSURE INTERESTS OF
CREDITORS ARE PROTECTED AND VALUE FOR SHAREHOLDERS IS MAXIMISED TO
FULLEST POSSIBLE EXTENT

At approximately 1700 hours on Friday, 5 October 2001, the Secretary of State
informed the Chairman of Railtrack Group, John Robinson, that H.M. Government
(the "Government") was not prepared to provide any additional financial
support to the regulated part of the group, Railtrack PLC, beyond that
envisaged in the regulatory settlement. The Secretary of State subsequently
petitioned the High Court to appoint an administrator for Railtrack PLC under
the Railways Act 1993.

The Secretary of State's petition for administration was heard at 1700 hours
on Sunday, 7 October 2001 and partners of Ernst & Young were appointed as
Railways Administrator with immediate effect.

Railtrack PLC was not in a position to oppose this petition given the
Government's decision to provide no further financial support beyond that
envisaged in the regulatory settlement. Railtrack PLC therefore, reluctantly
accepted that there was no credible alternative to administration. The
Directors regret that the Government felt compelled to take this action and to
withdraw its support which has been fundamental to the financial viability of
the group since privatisation. Nevertheless, the Directors of Railtrack PLC
have been advised by Government that funding is available to the administrator
to ensure the continuation of the operations of the rail network. The
Directors will co-operate with the administrator fully in the operational
management of Railtrack PLC to ensure that the network is not affected and
that confidence is maintained.

In view of these developments, and the uncertainty of the eventual outcome on
Railtrack Group, the Directors have requested the suspension of the listing of
Railtrack Group shares on the London Stock Exchange and that trading be
suspended with immediate effect.

The status of the trading of the listed bonds and convertible bonds of
Railtrack PLC is now a matter for the administrator to decide. The Directors
refer shareholders and creditors to the announcement by the Government issued
today, which sets out the intentions of the Government with regard to the
shareholders, trade and financial creditors and other stakeholders in
Railtrack PLC.

By way of background, shortly after the appointment of John Robinson as
Chairman in June 2001, Railtrack Group and its financial advisers, Credit
Suisse First Boston, entered into discussions with the Department of
Transport, Local Government and the Regions with a view to agreeing a means by
which a more secure financial framework could be created which would allow
Railtrack PLC to focus on improved service to customers, enhanced safety and
greater efficiency while providing an appropriate framework to build
shareholder value over the medium to long term. These discussions continued
until the end of last week with no indication from the Government that it
intended to take the actions which have now transpired.

In view of the suddenness of the Government's decision, the Board has not had
the opportunity to fully assess the consequences of administration of
Railtrack PLC on the remainder of the group and have appointed Deloitte and
Touche to advise on this. The Directors of Railtrack Group are currently
considering what steps should be taken with respect to the other companies in
the group. The value remaining in Railtrack Group's shares following
implementation of the administration will be dependent on the value realised
for the group's principal asset, Railtrack PLC, by the administrator and on
the value of its other assets.

The Directors have been pursuing and will continue to pursue all means
available to them to ensure that the interests of creditors are protected and
that value for shareholders is maximised to the fullest extent possible. The
Board also understands that the administrator has a duty to protect the
interests of both the shareholders and the creditors.

The Company has been informed by representatives of the Government that the
employment rights of Railtrack PLC employees will be unaffected by the
administration. Further details of the Government's proposals with regard to
employees are contained in the press release issued today by the Secretary of
State. Commenting on the appointment of the Railway Administrator, John
Robinson, Chairman of Railtrack Group said:
"I was appointed chairman of Railtrack at a time of great operational,
managerial and financial stress for the group, following an onerous and, in
the light of the Hatfield accident, unrealistic periodic review settlement.

"In the light of the increased investment required to safely operate the
railway and continuing cost pressures on certain major projects the Directors
recognised the need for a complete review of the financial position of the
group and appointed new financial advisers to facilitate this. The Board
believes that the proposal it put to the Government following that review
would have enabled Railtrack to continue to obtain finance from the private
sector, provide a framework to build shareholder value while at the same time
facilitating an increase in customer service and providing enhanced safety.

"Until last Friday evening we believed that the Government was giving serious
consideration to the Board's proposal. It has now been made clear to us that
the Government has decided not to provide further financial support to
Railtrack in its current form. The Directors are extremely mindful of their
duty to protect the interests of shareholders and creditors, but under current
circumstances, and recognising the duty of the administrator also to act in
the interest of both the shareholders and the creditors, we have concluded
that we should co-operate with the administrator in ensuring a smooth
transition.

"The Directors are grateful for the ongoing commitment all employees have
shown to the company. This is showing through in real delivery -
infrastructure performance delays are sharply down in recent months and
industry co-operation is improving.

"The Government has given its assurance that the rights of all employees will
be safeguarded. The Directors encourage all staff to work with the executive
management team and to co-operate with the administrator to ensure the
continued operation of a safe, reliable railway."


A further announcement will be made in due course.

- ends -

For more information please contact the Railtrack press office on 020 7557
8292 or The Maitland Consultancy on 07774 250811 or 07769 710335

All recent press releases can be found on the Railtrack web site
www.railtrack.co.uk

Railhub Archive ::: 2001-10-07 RTK-001