Eurostar restructure sees UK expand rail stake

Eurostar Restructure Sees Uk Expand Rail Stake - 27/06/2009

Cross-Channel train operator Eurostar is to be restructured with the UK expected to take a larger stake in the new company.

Speaking on behalf of transport secretary Lord Adonis, transport minister Chris Mole said the government was close to concluding negotiations with the French and Belgian owned state train operators SNCF and SNCB to incorporate the existing tri-national Eurostar operations into a single company.

According to the transport minister the UK will be left with a shareholding in the new Eurostar company "in the order of 40%". Currently three companies are responsible for Eurostar train operations with Eurostar UK holding a 33% stake in the unincorporated joint venture, SNCF having 62% of the existing shares and SNCB owning the remaining 5%.

The decision by the three countries to restructure Eurostar has been driven by the desire to replace the current complex ownership arrangement and create a single company which is better equipped to compete with other European train operators, such as Deutsche Bahn and Ned Rail, once EU rules to encourage greater international rail competition take effect in 2010.

Earlier this month the government nationalised London and Continental Railways, of which Eurostar UK is a wholly owned subsidiary (Transport Briefing 08/06/09). This allows ministers to separate the UK arm of the high speed rail operator from LCR's property and infrastructure interests and repackage it alongside the French and Belgian Eurostar interests as a single train operating company.

A spokesman for Eurostar UK said InterCapital and Regional Rail (ICRR), the consortium which in 1998 was awarded a management contract to manage Eurostar UK until 2010, would cease to exist once the new, single Eurostar company was established. National Express is the majority shareholder in ICRR with a 40% stake while SNCF holds 35%, SNCB 15% and British Airways the remaining 10%.

The final terms of the deal remain subject to negotiation with the transport secretary expected to make a further announcement later this year.