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2002-03-25 DTR-001
Department of Transport, Local Government and the Regions

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Railtrack administrators raise £4.4 billion from private sector


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Department of Transport, Local Government and the Regions

Railtrack administrators raise £4.4 billion from private sector
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related documents


2002-03-25 Network Rail launches proposal for early exit from administration for Railtrack plc (Network Rail)

2002-03-25 Taking Railtrack plc out of administration: quickening the pace (Railway Forum)

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date
25 Mar 2002 00:00
source Department of Transport, Local Government and the Regions
type Press release



The £2.1 billion commercial loan facility given by the Government to Railtrack plc in administration, from which approximately £1.9 billion has been drawn, was repaid today by Railtrack PLC together with interest.

Commenting on repayment, Transport Secretary Stephen Byers said

"This is a clear demonstration of the willingness of the private sector to invest in railways. The £4.4 billion facility has enabled the Administrators to repay the loan provided by Government so there is now no longer a direct call on taxpayer's money for the Government loan for Railtrack."

"The Government loan was made available on a commercial basis and has been used to repay pre-Administration trade and finance creditors and to keep the railway network running safely".

"The Administrators have remained within the limit of the loan facility since October, which clearly shows that contrary to comments in some quarters, the costs of running the rail network have not spiralled since administration".

NOTES TO EDITORS

1. On 7 October 2001, the High Court found that Railtrack plc was unable (or likely to be unable) to pay its debts and ordered that the company be put into Railway Administration. The purpose of the Administration process is to transfer Railtrack plc's relevant rail activities, as a going concern, to another company and to ensure the carrying on of those relevant activities pending the making of that transfer.

2. In order to ensure the continued safe operation of the rail network, the Government made a commercial loan agreement available to Railtrack plc, of up to £2.1billion, to the end of 31st March 2002, from which the Administrator has drawn down £1.9 billion. This has now been repaid with interest.

3. Under the terms of the loan agreement, in the event of the Secretary of State receiving relevant state aid approvals and confirming the same to the Company, Railtrack was obliged to use reasonable endeavours to procure commercial bank facilities (guaranteed by the Secretary of State) to refinance all outstanding advances. The European Commission raised no objections to the financial aid made available by the Government to Railtrack plc and clearance was given on 13th February.

4. Following the European Commission's decision of the 13th February 2002 to clear the package of financial assistance to Railtrack plc, the Administrators have secured up to £4.4 billion of commercial banking facilities, backed by a Government guarantee. This has enabled them to repay the short-term commercial loan that Government provided on 7 October 2001.

5. Interest was rolled up into the loan and was paid at the same time as the principal was repaid. It was calculated as follows:

- Advances were made and repaid under each of the two facilities, the Working Capital Facility and the Trust Facility;

- Each Advance had an associated Interest Period;

- Interest on each Advance accrued daily, at a commercial rate;

- At the end of each Interest Period, the interest was added to and thereafter formed part of the principal amount of such Advance.

Press Enquiries: 020 7944 3108
Out of Hours: 020 7944 5925
E-mail: press@dtlr.gov.uk
Public Enquiries: 020 7944 3000
DTLR website: http://www.dtlr.gov.uk



Railhub Archive ::: 2002-03-25 DTR-001





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