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Prospect of heavy investment hits Railtrack's share price

NEWS

LAST WEEK'S Ladbroke Grove train crash has increased expectations in the City that Railtrack will be forced to step up its investment programme.

Fears that Railtrack will have to sacrifice profitability for higher investment knocked £1.70 off its share price in the week following the disaster.

Railtrack's shares were priced at £13.31 before the crash. As NCE went to press they were quoted at £11.60.

Rail regulator Tom Winsor's review of Railtrack's investment programme was already causing uncertainty in the City. When it is published in December the review is widely expected to order Railtrack to raise infrastructure spending.

City nervousness about Railtrack increased after Monday's announcement that Winsor was investigating possible breaches in its operating licence.

Winsor has written to Health & Safety Executive director general Jenny Bacon asking her to investigate whether Railtrack is keeping the function of its Safety & Standards Directorate separate from commercial considerations.

If the HSE finds the S&SD is influenced by commercial factors, Winsor could strip Railtrack of its licence, removing it from the network.

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