Rail chiefs to split pounds 50m

New storm brews over sell-off as directors cash in on sale of train-leasing firm
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The Independent Online
The Government is facing a new storm over rail privatisation this week as four directors of train leasing firm Eversholt stand to collect up to pounds 50m from the company's sale to the Midland Bank's owner, HSBC.

The deal, expected to be concluded in the next few days, marks the second time former British Rail bosses have become multi-millionaires almost over- night.

This weekend, sources said the parties were close to a deal valuing Eversholt at around pounds 900m. The directors, employees and a consortium of City investors paid just pounds 580m for the company, one of three rolling stock leasing companies (Roscos) sold a year ago.

"Yet again a few stand to hit the jackpot on rail privatisation," said Labour's transport spokes-man Andrew Smith. "Eversholt's directors could walk off with millions as a consequence of the Tories selling off state assets on the cheap, while passengers around the country travel in trains which have been on the track for as long as 30 years."

The row comes after the final BR sell-off was agreed last week, with the choice of National Express for Regional Railways Central, the last of the 25 franchises to go.

Eversholt leases more than 4,000 mostly older trains to 16 of the operating companies and has only just delivered 41 modern Networker Express trains to run in the South-east.

Last August, the Government was fiercely criticised after Porterbrook, the smallest of the Roscos, was sold to bus operator Stagecoach for pounds 825m - a profit of pounds 300m in just seven months.

The National Audit Office is already investigating the Rosco sales and has criticised the Government before for failing to include "clawback" clauses to share in windfall sale profits

This week, Eversholt managing director Andrew Jukes is unlikely to match the pounds 33m profit reaped by his Porterbrook counterpart Sandy Anderson, who has since been in the hunt to buy Nottingham Forest football club.

Depending on the final negotiations, however, Mr Jukes is in line to land between pounds 15 and pounds 20m - a massive return on his pounds 110,000 investment.

Finance director Colin Habgood and engineering director Roger Aylward are set to collect pounds 10-pounds 15m each, non-executive chairman Peter Harper - a former Hanson director - pounds 2m-pounds 4m for just a year's work, and 61 other staff an average of up to pounds 300,000 apiece.

Again, City institutions will make the biggest killing, led by Candover and Electra Fleming, who stand to make up to pounds 165m each. With five other backers - BZW, Gartmore, Royal Bank of Scotland, Advent and Alpinvest - they put in all but pounds 390,000 of the pounds 70m equity, alongside pounds 510m of bank debt.

On Friday, the parties were still gathered at the offices of Samuel Montagu, the advisers to Forward Trust, Midland Bank's leasing arm, and none would comment on the negotiations.

The final headline price, however, depends on how pounds 80m still due to the Government for the late Networker Express trains is accounted for and how much debt has been paid off.

Eversholt is understood to have increased profits by pounds 5m to pounds 120m last year and cut its borrowings to under pounds 400m.

Clawback clauses are standard practice in commercial acquisitions, particularly where the true value of the assets are uncertain to the seller. They were used in the privatisation of the National Bus Company, and the NAO wishes to establish why they were ignored with the Roscos.

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