US bidder for BR rolling stock

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The Independent Online
GE Capital, the giant US finance house, has emerged as a likely bidder for at least one of British Rail's three rolling-stock leasing companies. The first formal sales documents go out this week.

The leasing companies are expected to fetch more than £1bn, but sources close to the offer said early estimates of £2bn to £4bn are over-optimistic. The companies each have up to 4,000 vehicles and turnover of £250m and will own almost the entire passenger fleet. Trains will be leased to the operating companies, which are to run the passenger franchises on the privatised railway system.

This week Hambros, adviser on the sale, is to send out pre-qualification documents to finance companies, venture capitalists, engineering firms and a number of specially formed consortia interested in the three Roscos, or Rolling Stock Leasing Companies.

The eventual short-list of bidders will be chosen from companies that have pre-qualified, a process that ensures interested parties have the financial and managerial resources to run the Roscos.

Consortia of financial and industrial companies could have an advantage because the Roscos are responsible for the basic maintenance of passenger trains as well as financing the rolling stock.

As vendors of operating leases, the Roscos require wider skills to manage than those usually found in finance lease companies, which has led to criticisms by Barclays' leasing subsidiary of the way the sale has been structured.

The three Roscos are among 60 subsidiaries being sold by British Rail's Vendor Unit, which expects to announce the disposal of about 20 companies - excluding the Roscos - by the end of April. A further 20 sales are planned by the end of 1995.

The initial batch of 20 is to include some, or all, of the seven factories of British Rail Maintenance Limited (BRML), which has a total turnover of £180m from overhauling locomotives and coaches, and Red Star, the parcels company, which was withdrawn from the market last year to be restructured.

Active marketing is to begin over the next month of British Rail's telecommunications subsidiary, ready for sale later this year.

Efforts are also being stepped up to sell the seven infrastructure maintenance companies for which about 180 contenders have been listed as interested.