Railtrack investors set to back deal

THE deal to replace in-administration Railtrack with a not-for-profit new company Network Rail seems certain to be approved by Railtrack shareholders this week.

A private shareholders' group is bitterly opposed to the deal, which will see Railtrack shareholders getting about 245p to 255p for each share. But major institutional shareholders - which own more than 80% of the 520m shares in Railtrack - are backing the Network Rail deal.

Shareholder approval is needed for the plan which was announced last month and which will see Network Rail buying Railtrack plc for £500m and Railtrack selling its interest in the Channel Tunnel Rail Link to the London & Continental Railways company for £375m.

Shareholders will vote on the rescue package at a Railtrack extraordinary general meeting in north London on Tuesday. The full result of the voting will not be known until Thursday, but Railtrack Group chairman Geoffrey Howe will give an indication of shareholders' views when he announces, on Tuesday, the votes cast ahead of the meeting.

The Railtrack Private Shareholders Action Group has said that Railtrack's board has not made out a good case for accepting the deal. The group believes Railtrack is worth far more than £500m. Chairman Andrew Chalklen said: 'We remain opposed to the offer and will be voting against it at the extraordinary general meeting.'

Following moves by former Transport Secretary Stephen Byers, Railtrack plc was put into administration in October 2001 and the shares, which had once been as high as 1700p, were suspended at 280p. Shares began trading again on the London Stock Market on 27 June.