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London & Continental Sale Delayed in Debt Row

Posted on: Thursday, 30 March 2006, 15:00 CST

By Robert Lea, Evening Standard, London

Mar. 30--Treasury fixer Sir Adrian Montague has failed in his attempt to buy the Channel Tunnel Rail Link and the British end of the Eurostar international train service.

The Department for Transport is set to announce that any plans for the sale of the debt-laden London & Continental Railways will be delayed until the Government-backed company behind the construction of the high-speed link from London to Folkestone is finished late next year.

Transport Secretary Alistair Darling walked into a storm last month after he admitted the Government was considering selling the business to Montague and a consortium including US merchant bank Goldman Sachs.

Montague is seen as the Treasury's favourite firefighting executive after stints organising the restructuring of Network Rail and British Energy, but the row flared up as it emerged that LCR's £5 billion debt mountain is being classified on the public sector books as the Government guarantees the majority of the liability.

LCR's equity is mostly owned by US construction group Bechtel, Swiss bank UBS and National Express, though the value of the equity portion is reckoned to be minimal.

Meanwhile, big American industrial contractors are queuing up to buy British Nuclear Group (BNG) whose sale price could top £1 billion should an auction break out.

British Nuclear Fuels (BNFL) today confirmed that BNG, which makes profits of £100 million a year from nuclear clean-up contracts, is officially up for sale in a process likely to attract attention from Bechtel, Fluor and Jacobs of the US and France's Areva.

British company Amec and its US alliance partner CH2M Hill could also be a bidder for BNG, whose people, expertise and experience are thought likely to put it at the forefront of up-for-grabs Nuclear Decommissioning Authority contracts reckoned to be worth £2 billion a year for at least the next 30 years.

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Copyright (c) 2006, Evening Standard, London

Distributed by Knight Ridder/Tribune Business News.

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UBS, NEX, AREVA, FLR, AMEC,

Source: Evening Standard

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