Railtrack saves the day for LCR

Outlook On Raising Interest Rates, The Drinks Giants' Merger And Financing The High-Speed Rail Link

After the salutary experience of Eurotunnel, raising finance for the high-speed rail link that will eventually connect London and the rest of the country to the Channel tunnel was always going to be a difficult proposition to sell. But London and Continental Railways, the consortium selected to build the 68-mile link, seems to have gone one better than even Eurotunnel could manage under Sir Alastair Morton's tumultuous leadership.

LCR has run into its first full-blown financial crisis before a single sod has been turned or the City tapped for pound in either debt or equity. The project, we are told, is in meltdown mode. In a desperate bid to slash costs (estimated at pounds 3bn before financing charges) LCR is contemplating building it in two phases. That means passengers will only be whisked a grande vitesse as far as the Essex hinterland whereupon they will have to make do with a rather more stately progress into Waterloo via the rackety old Southern rail network. What about the St Pancras terminus and seamless onward travel north of the capital? We'll build it if we ever raise the money.

Step forward Railtrack with a triple-A credit rating and more cash flow than it knows what to do with to save the day. It will take a stake in the project, rustle up another pounds 600m and guarantee that Britain has the 21st century rail network that a nation committed to being at the centre of Europe needs and deserves.

Given that LCR numbers SBC Warburg among its shareholders and the world's second-biggest bank among its providers of project finance, talk of a financial crisis looks a little overdone.

What is apparent, however, is that Railtrack wants to muscle its way in and seems to have the backing of the Government which just so happens to be putting up pounds 1.4bn of the construction costs.

Railtrack has the kind of cashflow that LCR will struggle to raise from its Eurostar services, the project experience and the access to cheap capital. It also has a vested interest in ensuring that St Pancras goes ahead since that will free up freight capacity on existing rail lines to the tunnel.

The last thing LCR can afford is a rerun of the Channel tunnel so it is right to want the project costed down to the last penny before pressing the button. But when it does, don't be too surprised to see the Fat Controller, Railtrack's Sir Bob Horton, somewhere on the footplate.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower