NETWORK RAIL CONFIRMS PLANS TO RAISE FINANCE WITHOUT GOVERNMENT GUARANTEE

Monday 31 Jul 2006

NETWORK RAIL CONFIRMS PLANS TO RAISE FINANCE WITHOUT GOVERNMENT GUARANTEE

Region & Route:: National

Network Rail has today confirmed plans to raise finance without support from the Government guarantee. Fred Maroudas, Director of Funding said: “Network Rail’s recovery from the situation we inherited has moved further and faster than anyone had forecast. Strong improvements in train performance coupled with delivering significant efficiencies and cost savings means we can consider the option of raising our own debt, without Government guarantee, earlier than predicted. “Our initial thinking was that we would raise new debt independently starting from 2009, but this proven track record and the company moving into profitability this year, may well allow us to accelerate our programme. “By moving beyond Government guaranteed financing we will reinforce the emphasis on financial discipline that has been brought into the business and help to build on the progress achieved in improving efficiency and financial control. “We will be discussing our financing plans with the Office of Rail Regulation and Government as part of the regulatory review process.”

Notes to editors

Four years ago Network Rail acquired Railtrack, and inherited a company with major challenges. During these four years, the company has delivered improvements in train punctuality, increased efficiency, cut costs, and stabilised the financial performance of the business. The Government support package was put in place when Network Rail took over from Railtrack. From this solid foundation, Network Rail decided some months ago to review the future of its financing and has concluded that the time is now right to prepare to take our financing forward from the present, transitional arrangements to a position where new debt can be raised independently, without use of the financial indemnity from Government. Network Rail forecasts additional net borrowings of £3bn over the next three years to fund our investment programme. Existing bonds will retain the backing of the Government guarantee until maturity. Network Rail’s net debt presently stands at £18.2bn.

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