Freightliner staff on track for shares bonanza

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The Independent Online

Directors and employees at Freightliner, the privatised rail freight operator, are in line for a shares bonanza following a surge in company profits.

The value of Freightliner has already increased ten-fold to £50m since it was bought from British Rail by a management buyout team seven years ago and is set to rise further after a strong financial performance in the last 12 months. Profits are thought to have more than doubled from the £4.4m recorded in 2001-02.

Freightliner's management, led by chief executive Alan Galley, owns 30 per cent of the company valued at £15m while employees own 10 per cent. The remaining 60 per cent is held by 3I and Electra, the two venture capital houses which financed the original buyout.

The shares are currently valued at 200p. Ernst & Young, which calculates the value of the company twice a year in order to allow employees to trade their shares, carries out its next valuation in August and is certain to come up with a higher figure.

When Freightliner was privatised, its 1,300 employees each received 2,000 free shares. Since then, the size of the workforce has grown to 1,450 but the number of employee shareholders has fallen to around 800 as some staff have cashed in their windfalls.

There are no plans as yet for a flotation of the company although there is some speculation that 3I and Electra could sell down part of their holdings in a refinancing next year.

Freightliner operates two services - a heavy freight service carrying goods such as coal, cars and cement and an "intermodal" service which involves transporting containers by road and rail. The group operates a fleet of more than 100 trains and 180 trucks and transports more than one million standard containers a year.

It recently struck a new three-year deal with its biggest customer, P&O Nedlloyd, to transport containers from the ports of Southampton, Tilbury, Thamesport and Felixstowe to inland rail terminals around the country.

Freightliner is also interested in taking on some of Royal Mail's letters business following the postal operator's decision to terminate its contract with English Welsh and Scottish Railways. No serious discussions have yet taken place.