LONDON & Continental Railways shareholders Ove Arup, Halcrow, National Express, Systra, Virgin and SG Warburg are to sell their stakes in the Channel Tunnel Rail Link operator, it emerged this week.
The rescue plan, expected to be put to Deputy Prime Minister John Prescott on Monday, will see Bechtel and Railtrack take over LCR and build the link in two phases, the first now including a station at Ebbsfleet, Kent.
And under the plan, phase two into St Pancras would begin construction only when Waterloo International station currently operating at 50% capacity becomes overloaded.
It is understood that executives at LCR, Railtrack and Bechtel are aiming to agree terms by tomorrow (Friday) before LCR presents the rescue plan to the Department of the Environment Transport and the Regions.
Prescott will then have until March 31 to decide whether to accept the offer.
Under the deal now being thrashed out, LCRs shareholders will recoup their original investment in the project. Railtrack will agree to buy the track on completion as well as now taking a stake in LCR. This would allow Railtrack to profit from increases in CTRLs value as the relatively high-risk construction phase of the project comes to an end.
But Railtrack is also said to want a slice of the expected 450M in fee income which will be earned by LCRs engineering subsidiary Rail Link Engineering from the design of the link. Taking over RLE will give Railtrack access to project management expertise which can be tapped as it develops its own 10 year, 14bn track investment programme.
Success of the plan hinges on LCRs ability to franchise off the loss- making Eurostar passenger service. It is understood that the rail link operator has sought bids for Eurostar from other train operating companies.
Failure to find a buyer for Eurostar would collapse the rescue plan and force the government to retender the project as Railtracks operating licence prevents it from running Eurostar. Thus if LCR cannot off-load the service Railtrack will not be able to invest in the project.
City sources put East Coast Main Line operator Great North Eastern Railways considered the best train operator as favourite to take over Eurostar. But whoever takes it on will inherit accumulated losses of around 200M. Railtrack and Bechtel are also expected to increase Eurostars track access charge to increase the financial viability of the project.
Railtrack and Bechtel are also expected to press the government to rephase the 1.8bn subsidy for the project. This was originally scheduled to be released after 68% of the line was finished.
They want to see the subsidy spread over several years instead of in two annual tranches as currently planned. City sources believe this idea could appeal to the Treasury as the release of 1.8bn in two annual chunks would put a strain on public spending in those years.
It is understood that the scope of phase one could be extended to include the station at Ebbsfleet. Initial plans for phase one had the high speed line switching to conventional track just south of Ebbsfleet.
But Whitecliff Developments, the builder of the huge Whitecliff retail park next to Ebbsfleet station, is understood to have pushed for the station to be built as part of phase one.