Government troubleshooter in rail storm

Railtrack Group rounds on Adrian Montague for casting doubt over asset values and potentially deterring bidders. Clayton Hirst reports

Adrian Montague, the trouble-shooter who was last week drafted in to chair British Energy, is at the centre of a fresh row over the liquidation of Railtrack.

The argument centres on Railtrack Group's £50m land portfolio, which is the last major asset to be sold before shareholders receive compensation for the collapse of the company.

Mr Montague is deputy chairman of Network Rail, which runs Britain's rail infrastructure. Last month he wrote to Railtrack Group's liquidator spelling out Network Rail's rights to the sites. The letter was passed to bidders.

It is understood Mr Montague believed that Railtrack Group had not provided detailed enough information to potential purchasers.

The letter, sent two days before property companies were due to submit bids, is understood to have angered Railtrack Group, which believed that the letter may put off some bidders

The 24 sites, many close to railway lines and stations, have a book value of £33m, but Railtrack Group believes they could fetch £50m. It is estimated that when fully developed, the sites could be worth more than £2bn.

One property industry source involved in the bidding process said: "The letter has caused a great deal of uncertainty. It has made us look at the numbers very carefully."

A spokesman for Network Rail said: "I can confirm that the letter clarifying the position on the sites was sent to the liquidators."

Well-placed sources said Network Rail had become concerned about the sale process after it was contacted by potential buyers asking for more information on land in the run up to bidding.

Railtrack Group, however, claims that bidders were given full details at the beginning of the sale process. A Railtrack spokeswoman said: "We have been as totally open and transparent as we can with the bidders.

"We are happy with the offers we have got," she added, and said that completion was still on track for Christmas.

It is understood that quoted property companies Chelsfield and Hammerson, as well as Stanhope, the private property company controlled by Sir Stuart Lipton, have lodged bids. Industry sources said that, having studied the sites, quoted companies Land Securities, Pillar Property and Great Portland Estates decided not to bid.

In addition to access rights, Network Rail also has the opportunity to buy the land at market value under so-called "operational land agreements".

When the sale of the land is complete, Railtrack Group will start to distribute the cash to its shareholders. The first instalment is expected in early January. In total, investors are due to receive 252p to 260p a share.

This will mark the end of the Railtrack affair, which began when the then Transport Secretary, Stephen Byers, placed the company into administration in October 2001.