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Bond sales to help finance CTRL

CHANNEL TUNNEL Rail Link operator London & Continental Railways plans to issue Government-backed bonds worth £1.65bn in the next two weeks.

Money raised will go towards the cost of financing section one of the line, which is already under construction between Cheriton and north Kent.

The bond issue's exact timing is not expected to affect short-term funding. Last autumn LCR raised £200M by selling its Eurostar train fleet to a group of banks under a leaseback arrangement. The company is currently spending around £20M a month, having started to spend the Eurostar proceeds when work began on site last October.

'We are running slightly behind schedule but we set ourselves a demanding target,' said James Brent of Schroders, which is advising the Government.

Two tranches of bonds are likely to be issued, one maturing in 2028 and the other in 2038. A further £1bn of bonds, timed to mature in 2010, are expected to be issued later. These shorter term bonds will be tied to profits from Eurostar and from track access charges.

Timing of this issue will depend on LCR's ability to return Eurostar to profit.

Last week LCR's bankers, HSBC Markets and Warburg Dillon Read, said they expected to start marketing the bonds on 8 February, assuming the last 'minor' obstacles to the LCR rescue deal were removed.

Heavy capital spending is not expected until the spring. So far work has been confined to clearance work at the sites for the Medway viaduct and tunnel, plus piling in central Ashford - in preparation for construction of a cut and cover tunnel to take the line through an industrial estate west of the town centre.

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