Railtrack

Railtrack was a group of companies which owned the tracks, signals, tunnels, bridges, level crossings and some stations of the British railway system from its formation in April 1994 until 2002. Its main operating arm, Railtrack PLC, was sold to "not for dividend" organisation Network Rail on October 3, 2002, and was later renamed Network Rail Infrastructure Ltd. The parent company Railtrack Group plc was renamed RT Group and went into liquidation.

Demise

The October 2000 Hatfield train crash and the subsequent major repairs undertaken across the whole British rail network are estimated to have cost in the order of £580 million. This, and other debt issues plunged Railtrack from profit to a loss of £534m, causing Railtrack to approach the government for funding, which it controversially used to pay a £137m dividend to its shareholders in May 2001. This was the last straw for the increasingly impatient Labour Government, which placed the company into administration. Critics accused Labour of deliberately bankrupting Railtrack in order to force what many saw as partial renationalisation.

Related Topics:
Hatfield train crash - Dividend - Shareholder - Labour - Bankrupt - Renationalisation

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Shareholders initially received no compensation nor were they promised any. The Government considered that the act of administration was valid as it performed under terms set out in the privatisation legislation.

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Railtrack's parent company, Railtrack Group, continued to exist under the name RT Group, and was placed into members? voluntary liquidation on October 18, 2002. The Railtrack business (and its £7 billion debt) had been sold to Network Rail for £500 million, and the various diversified businesses it created to seek to protect itself from the loss-making business of running a railway were disposed of to various buyers. £370 million held by Railtrack Group was frozen at the time the company went into administration and was earmarked to pay Railtrack shareholders an estimated 70p per share in compensation. The Group's interest in the partially built Channel Tunnel Rail Link was also sold to raise funds.

Related Topics:
October 18 - 2002 - Network Rail - Channel Tunnel Rail Link

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Railtrack shareholders formed two groups to press for increased compensation. A lawyer speaking for one of those groups remarked on GMTV that his strategy was to sue the government for incorrect and misleading information given at the time Railtrack was created, when John Major was Conservative Prime Minister. An increased offer of up to 260p per share was enough to convince the larger shareholder group, the Railtrack Action Group, to abandon legal action. The smaller Railtrack Private Shareholders Action Group continues to press its claim. The trial of this claim against the Secretary of State for Transport commenced in the Chancery Division of the High Court on June 27, 2005 and ended on July 21, 2005, with judgement expected in October.

Related Topics:
Lawyer - GMTV - John Major - Prime Minister - June 27 - 2005 - July 21

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The Guardian reported on November 23, 2001, that a further £3.5 billion may be needed to keep the national railway network running, a sum disputed by Railtrack management. Profits announced mid December undermined the Government's case that the Company had ceased to be commercially viable and a long and politically embarrassing legal battle looked likely.

Related Topics:
The Guardian - November 23 - 2001

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