Network Rail moves closer to agreement on £10bn debt restructuring

Network Rail, the not-for-profit owner of Britain's railway infrastructure, is poised to agree on a £10bn debt restructuring, to tide it over until the conclusion of a review of income from train operators and the Government.

Network Rail, the not-for-profit owner of Britain's railway infrastructure, is poised to agree on a £10bn debt restructuring, to tide it over until the conclusion of a review of income from train operators and the Government.

The company is in late-stage talks with its bankers, led by HSBC and Merrill Lynch, over the creation of a £10bn debt facility, which could see the first tranche of medium-term loan notes issued this week. They will be redeemable over three to five years.

The new debt, which could be signed off as early as tomorrow, will replace a £9bn bridging loan from a syndicate of nine banks, put in place two years ago when the company bought the assets of Railtrack, which sank into administration.

The latest refinancing has become necessary because of delays to the new five-year period of regulatory controls, which sets access charges for the train operating companies which use Network Rail's track. Both Network Rail and the operators' fees are subsidised by the Government through the Strategic Rail Authority, which says it does not have the funds.

Meetings between the SRA, Network Rail and the Government are due this week with a deadline of next Sunday to agree on a deal, which could include a two-year phasing-in of the new payment regime.

Network Rail has been promised £22.2bn over five years, up from £16.7bn under the last five-year regime. When its income has been settled, the company intends to tap the bond markets for longer-term funds, through a securitisation of track revenues. It refused to comment yesterday.