Sea Containers

Sea Containers announces settlement of dispute with U.K. Strategic Rail Authority; Deputy Chief Financial Officer appointed
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date 5 July 2004
source Sea Containers
type Press release

HAMILTON, Bermuda, July 5 /PRNewswire/ -- Sea Containers Ltd. (NYSE: SCRA and NYSE: SCRB), (www.seacontainers.com) passenger and freight transport operator, marine container lessor and leisure industry investor, announced that its GNER railway subsidiary has signed agreements with the U.K. Strategic Rail Authority (SRA) to settle the SRA's claim for participation in the settlement between GNER and Network Rail for damages arising out of the Hatfield rail disaster in October 2000 and its aftermath. Network Rail had earlier paid GNER GBP238 million to cover losses. The SRA felt that GNER should contribute to it GBP25 million of this settlement but the contractual obligation to do so was unclear and could only have been resolved by arbitration.

Ultimately, GNER agreed to pay GBP17 million to the SRA out of the Network Rail settlement which was fully provided in the company's 2003 financial statements. Additionally, GBP8 million will be paid to the SRA in monthly instalments in the period April 2005 to April 2006. In return for the additional GBP8 million the Strategic Rail Authority has agreed to release immediately GBP42 million (US$76 million) of security posted by GNER as a requirement of its franchise agreement, to remove the SRA's right to require GNER to increase its share capital and to indemnify GNER for the difference between the new compensation regime stipulated by the U.K. Rail Regulator to take effect from April 1, 2004 and the original compensation regime in force when the franchise agreement came into effect in 1996. The new regime is less favorable to GNER than the original one. The compensation regimes relate to payments made by Network Rail, the infrastructure provider, to GNER for infrastructure failings, and bonus payments from GNER to Network Rail when infrastructure performance exceeds defined targets.

Mr James B Sherwood, President, said that GNER had agreed to the settlement primarily because it is seeking to renew its franchise and is bidding for two additional new franchises, Integrated Kent and Greater Western, and it was not appropriate to remain in dispute with the SRA during this process.

He indicated that the results of the U.K. Government's railway review now in progress are expected during July and timing of the bid for the renewed franchise could depend on the government's decisions arising out of that review. It has been widely rumoured that the government will abolish the SRA and give more powers to Network Rail but the franchise system will remain intact.

Mr Sherwood also announced that Ian C Durant, 45, has been appointed Vice President and Deputy Chief Financial Officer with effect from June 1, 2004. Mr Durant is a Chartered Accountant and has held senior financial positions in the Jardine Matheson Group in Hong Kong, including Finance Director of Hong Kong Land Holdings and Group Finance Director of Dairy Farm International. He is a U.K. citizen and most recently was Group Finance Director of Thistle Hotels plc in Britain. Mr Durant will understudy Daniel J O'Sullivan, the company's Chief Financial Officer who will retire at the end of 2004.

Mr Sherwood said "Ian Durant's international and public company experience has prepared him well for the diverse worldwide operations of Sea Containers and we are pleased to welcome him to the company."

Railhub Archive ::: 2004-07-05 SEC-001