Railtrack investors back rescue

12 April 2012

RAILTRACK shareholders have voted to approve the company's rescue plan, investors were told at an extraordinary general meeting in London.

Private shareholders asking questions at the meeting had made clear their anger at the proposed deal, which will see in-administration Railtrack Plc sold off to a not-for-profit new company Network Rail, for £500m. The deal means the shareholders are expected to get about 245p to 255p a share.

The Railtrack Private Shareholders Action Group believes Railtrack is worth far more than £500m. But in figures disclosed at the end of the emotional three-hour meeting it became clear that postal voting carried out already means the proposal will go ahead.

In the postal voting, 276,439,336 shares were in favour of the proposal, and 9,267,531 against. The vote for represents 53.2% of the total shares in issue, and only a simple majority is needed. The effect is that angry shareholders voting in person today cannot affect the outcome, which will also see Railtrack selling its interest in the Channel Tunnel Rail Link to the London & Continental Railways company for £375m.

It had been expected that private shareholders would be heavily outvoted by major institutional shareholders who own more than 80% of the 519m shares in Railtrack and were known to be backing the deal.

Hundreds of private shareholders flocked to the extraordinary general meeting at Alexandra Palace in north London and the Board of Railtrack Group came in for some fierce questioning.

Investors were demanding that the company fight on and litigate for a better deal.

One shareholder asked: 'Where's your backbone? You've won one battle, why not battle on?' This was a reference to initial indications that shareholders would receive no compensation.

But group chairman Geoffrey Howe told them: 'The board has to look at the options that are there, the choice is the offer which is on the table, which produces a certain amount of money for the shareholders, or litigate and fight on.'

'In the board's view that is a risky and uncertain option. You don't know if you will be successful, you don't know how long it will take you, how much it will cost you, and how much you will get.'

And he added: 'The proposals in front of you today are part of a package which should permit between 245p and 255p being returned to shareholders. While I know that many shareholders believe this sum should be higher, the board has to be realistic about the options that are available.

'It is only 10% less than the share price on the day our subsidiary Railtrack Plc went into administration and it is a significant advance on the Government's initial position that shareholders would receive nothing.'

Following moves by former Transport Secretary Stephen Byers, Railtrack Plc was put into administration in October 2001 and the shares, which have once been as high as £17 were suspended at 280p. Shares began trading again on the London Stock Market on June 27 this year.

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