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2014-10-13 HMT-001
HM Treasury


Expressions of interest sought for UK holding in Eurostar

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HM Treasury

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HM Treasury

Expressions of interest sought for UK holding in Eurostar

13 October 2014
source HM Treasury
type Press release


The Chancellor, George Osborne, announced today that he is inviting expressions of interest from bidders for the UK government's 40% holding in Eurostar International Limited.

The Autumn Statement 2013 and National Infrastructure Plan 2013 set out the government's ambition to achieve £20 billion from corporate and financial asset sales by 2020. Having identified the government's stake in Eurostar as a possible candidate for sale, the government has now started the sale process:
· Any parties interested in purchasing the stake are now invited to come forward, with a deadline of 31 October to respond.
· The government's key objective in a potential sale will be to maximise value for money for the UK taxpayer.
· Subject to achieving value for money, we would expect to reach definitive agreements in the first quarter of 2015

Eurostar is Europe's leading international high speed rail operator. Since services began in 1994, Eurostar has carried over 145 million passengers, with over 10 million in 2013 alone, whilst sustaining traffic growth every year for the last decade.

Following the incorporation of Eurostar into its current form in 2010 Eurostar has continued to be highly successful; attracting record passenger numbers, launching new destinations and ordering a new fleet of state of the art trains.

Rt Hon George Osborne, the Chancellor of the Exchequer said:

"I am determined that we go on making the decisions to reform the British economy and tackle our debts. So we will proceed with the potential sale of the UK's shareholding in Eurostar today. Ensuring that we can deliver the best quality infrastructure for Britain and the best value for money for the tax payer are key parts of our long term economic plan. As part of our aim to achieve £20bn from assets sales by 2020, the sale proceeds would make an important contribution to the task of reducing the public sector debt."

The pre-qualification letter has been published today on the website with a deadline of 12pm on Friday 31 October for interested parties to respond.


Notes to editors
1. Eurostar is the high-speed train service linking St Pancras International, Ebbsfleet International, Ashford International, Paris, Brussels, Lille, Calais, Disneyland Paris, Avignon and the French Alps.
2. The current Eurostar train was first introduced into service in 1994 carrying 750 passengers and operating at speeds of up to 300kph. Since then, the fleet of 28 trains has carried over 145 million passengers between London and mainland Europe. Following their refurbishment these trains will continue to form a core part of the Eurostar fleet. The new Eurostar e320 train will carry more than 900 passengers at speeds of up to 320kph.
3. Eurostar was established in 1994 as a partnership between three railway companies: SNCF, SNCB and British Rail (subsequently LCR (London and Continental Railways)). On 1 September 2010, Eurostar became a single, unified corporate entity owned by three shareholders: SNCF, SNCB and LCR.
4. In June 2014, the UK Government holding transferred from LCR to HMT.
5. The government is being advised by UBS. Bidders interested in purchasing the holding must respond to the pre-qualification letter which has been published today (13 October 2014) on the website by 12pm on Fri 31 October.

Additional background

On timing, the 2013 Autumn Statement and National Infrastructure Plan set out the government's ambition to achieve £20 billion from corporate and financial asset sales by 2020 and identified the government's stake in Eurostar as a potential asset for disposal. Following a feasibility study and preparation work over the last 9 months we are now ready to launch.

In inviting expressions of interest from bidders, we have been clear that our key objective is to maximise value for money for the UK taxpayer and we will only sell the stake if this objective can be met.

We will continue to test offers against our sale criteria at all stages of the process. If value for money is not being achieved we will take the decision not to sell the stake at this point.

We are asking for expressions of interest by 31 October. Once we have analysed these response we can move to 1st round bids. Subject to achieving our value for money objective, we would expect to reach definitive agreements in the first quarter of next year.

We are following a standard procedure with 1st and 2nd round bids. This is similar to the process used for the successful sale of HS1 in 2010.

Eurostar has been and will continue to be operated as an independent private entity. We see no reason why the sale of the government's 40% stake will lead to any change to/deterioration in the service. In fact, Eurostar is already committed to introduce new fleet of state of the art trains and to serve new destinations.

The process has been designed to maximise value for money for the UK taxpayer and we expect a range of bidders to be interested in the asset including infrastructure, pension and insurance investors.

Can anyone veto a potential bidder eg SNCF, French Govt, EU?
SNCF and SNCB have agreed not to participate in the sale process or to make a bid during the process. However, the SNCF and SNCB do have a "last look" pre-emption right to purchase the UK share at a 15% premium above the price of the successful bidder.

We expect a wide range of bidders to be interested in the asset, including infrastructure, pensions and insurance investors.

All bidders will be required to take part in a pre-qualification process which includes, amongst other things, a fit and proper person test.

Can SNCF itself bid?
As above.

Does Labour back Coalition plans?
Can't really comment on Labour policy on asset sales here.

Does the Eurostar sale hinder its current bid for East Coast franchise?
It does not. Eurostar continues to operate business as usual, including the joint bid with Keolis for the East Coast franchise.

What's the hoped for price?
For commercial reasons, we're not able to comment at this stage.

Railhub Archive ::: 2014-10-13 HMT-001


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