GNER parent to file for protection from creditors

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The Independent Online

Sea Containers, the parent company of the inter-city rail operator GNER, will today file for Chapter 11 bankruptcy protection after failing to pay back a $115m loan which fell due yesterday.

Staff at the London headquarters of the Bermuda-registered group and the York head office of GNER will be informed of the decision today.

Bob Mackenzie, the chief executive of Sea Containers, will stress that it remains business as usual and that he still aims to complete a financial restructuring of the business. He is also expected to stress that the move will have no impact on the day-to-day operations of GNER, which operates services on the east coast mainline between London and Scotland.

Sea Containers was left with little option but to file for bankruptcy protection after it ran out of time to hammer out a refinancing deal with bondholders. The move will protect both the company and other creditors from potential action by bondholders to push it into insolvency. The group was de-listed from the New York Stock Exchange two weeks ago.

A Sea Containers spokes-woman declined to comment ahead of today's filing. But she said: "We have always acknowledged that Chapter 11 was an option. We are keen for the financial restructuring to continue in an orderly manner."

Sea Containers has slashed its debts by more than a half to $610m by selling off its Baltic ferry operations. But it is running low on cash and is suffering heavy losses on GNER after over-bidding for a new 10-year east coast franchise.

GNER agreed to pay the Government £1.3bn in March 2005, but in the first 14 months of the franchise, revenues fell short by £33m after traffic levels undershot the company's forecasts by a big margin.