The six directors who subscribed for 275,000 shares via a placing with investors retain a 23.1 per cent stake in the company, worth pounds 4.3m at last night's closing price of 210.5p. The options are in addition to 1.75 million shares they were granted at the placing price of 100p.
The hefty premium immediately sparked a political row as the Labour Party attacked the flotation.
"This is the latest evidence of the Tory privatised gravy train steaming ahead," said Andrew Smith, shadow transport secretary.
"The general travelling public in East Anglia will be outraged that six directors walked off with millions of pounds worth of shares in a day, as a result of speculation rather than any improvement to the railway.
"It is all the more scandalous as neither the general public nor Anglia railway employees were able to buy shares in the privatised GB Railway company."
Net proceeds of pounds 6.3m from the placing by Guinness Mahon on the Alternative Investment Market will be used to meet funding requirements for Anglia Railways, the company's first rail operation , which runs trains from London, Ipswich and Norwich. But they stand to make even greater windfall gains if GB Railways is awarded the London-based Thameslink rail franchise for which it has been short-listed.
Under a controversial scheme, the six directors have been granted options to buy 1.2 million shares at 0.75p, equal to up to 11.11 per cent of the shares needed to fund the Thameslink franchise.
The share and options package recognises the unspecified cost incurred by the directors over several years in bidding for an unspecified number of passenger rail franchises.
It bears many similarities to the scheme devised for executives at Prism Rail, the only other pure rail operator quoted on the stock market.
"It's a very similar set-up to the Prism, but it is not to the same extent," said Mark Cunningham of Panmure Gordon, brokers to the issue.
Last month the seven founder investors of Prism Rail, which like GB Railways was set up to tender for passenger train franchises, were awarded free shares worth pounds 5.4m after unveiling plans to finance their fourth successful bid.
Details of the share bonanza emerged as Prism announced a pounds 12m rights issue to help fund the contract to operate West Anglia Great Northern railway, the heavily-subsidised line which runs from London to Stansted airport, Cambridge and Peterborough.
The founders already own just over a third of Prism's shares, worth more than pounds 32m at last night's closing price of 475p, compared to their placing price in May of 100p.
Apart from Lord Sheppard, other GB Railway directors to gain yesterday included deputy chairman Jeremy Long and finance director Simon Gunn and Canadian transport consultant Michael Schabas
GB Railways will receive a subsidy of pounds 35.9m in the first year of its seven-year licence, declining to pounds 6.3m in 2003-4 and will invest in 20 four-car trains worth up to pounds 80m.Reuse content