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Railtrack set to split track and property assets

RAILTRACK IS expected to announce plans to split its track maintenance, renewals and project delivery operations from its property division in the next week.

Under the proposed shake up, Railtrack will effectively become a Stock Exchange listed property company, completely separate from its track operations division.

The proposed corporate status of the track and operations division was unclear as NCE went to press.

However, industry insiders expect Railtrack to announce its plans next week. The announcement is timed to coincide with Railtrack's annual results next Thursday. These are expected to report a continued poor financial performance.

The move is part of a plan to secure Railtrack's financial stability by separating the high risk track operations from the more financially robust property division. Property accounts for most of the company's value.

Following the shake up, the track operations division is expected to contract out project delivery services, maintenance and renewals work under long term framework agreements.

It is believed that Railtrack will also split the rail network into three or four regions, replacing its seven geographical operating zones.

Major programme management firms are then expected to take over the running of each region under long term contracts. Candidates for this work would include major project management firms like Bechtel and Parsons Brinckerhoff, Fluor Daniel and Brown & Root.

Contracting out track work is expected to help the track division improve its efficiency and free work from Railtrack's bureaucratic decision making structure.

These firms would be shown the revenue figures, from track access charges, and awarded long term contracts to take over the day to day running of the regions.

Railtrack has had to pay out at least £600M in compensation to the train operating companies as a result of the Hatfield train crash. The sum will also cover its massive re-railing programme, and is expected to rise substantially.

Railtrack's share price has been in free fall since the Hatfield crash, plummeting from almost £12 in September to under £5 now.

But, free of the high risk maintenance and renewals business, Railtrack's share price is expected to rise to reflect the value of its massive property portfolio.

Railtrack said it would be able to give a better indication as to how the company will operate in the future once its results are announced.

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