Second BR service company on block

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Business Editor

Scotland Infrastructure Maintenance is expected to be sold next week, the second of British Rail's track-servicing and construction companies to go on the block.

Yesterday the Government announced the pounds 15m management buyout of Scotland Track Renewals Company, the first to be sold among the 13 companies belonging to British Rail Infrastructure Services (Bris.)

A management buyout team has bid for Scotland Infrastructure but large construction companies such as Tarmac are also thought to be interested. There is said to be intense management interest in all the Bris companies.

The Department of Transport is aiming to have all of them sold in time for the Railtrack flotation in May, but railway industry sources suggested a target of "more than half" was more realistic.

Railtrack regards the sale of a substantial number of the Bris companies as vital to the success of the flotation, because they account for half of the company's costs. This means they are one of the most important factors in Railtrack's long-term profitability, because of the scope they offer for cost savings, as existing three- to five-year maintenance and renewal contracts are renegotiated on a competitive basis.

Railtrack estimates that as early as 1997 pounds 100m of its infrastructure projects will go out to competitive tender.

Scotland Infrastructure maintains and services the rail network in Scotland. It is about five times bigger than the track renewals company which lays new track and is expected to turn over pounds 20m in the financial year to March.

Based in Glasgow, Track Renewals is led by Frederick Saunders, managing director, who has worked for BR for more than 25 years.