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Government takes control of London & Continental Railways

09 Jun 2009

UK: The government has taken direct ownership of London & Continental Railways Ltd for a nominal price, Secretary of State for Transport Andrew Adonis announced on June 8, and LCR's financial subsidiaries have also been transferred to the government. This follows last month's clearance by the European Commission of state aid for the restructuring of LCR, which built and operates High Speed 1 and owns the UK arm of Eurostar.

LCR is dependent on £5·169bn of government-guaranteed debt, and since 1999 the government has had a special share giving a wide range of control over the business.

Restructuring to relieve high speed infrastructure subsidiary HS1 Ltd and train operator Eurostar of their financial liabilities should allow HS1 Ltd to lower its access charges to commercial rates, 'and thereby attract more trains and wider choice of operators', said Adonis. It would then be possible for Eurostar to operate 'on a sustainable commercial basis'. The government is discussing the best future strategy for the Eurostar joint venture with its international partners.

The government intends to sell a long-term concession to manage the high speed line 'as and when market conditions allow.' The value realised will be used to offset public investment in the project.

The value of LCR's property interests will be realised 'on a case-by-case basis, at a time which reflects the best balance of value and risk to the taxpayer.'