As you may be aware, a railway administration order has been made in relation to Railtrack plc (the “Company”). Under administration, the Company will continue to operate. This letter sets out arrangements that the Secretary of State has put in place with the administrator with regard to the creditors of the Company.

Trade Creditors

A loan agreement has been entered into between the Secretary of State and the Company in administration. That loan agreement provides a commitment on the part of the Secretary of State to make available funds to the Company in administration to ensure that trade creditors are paid as their debts fall due in the ordinary course.

Finance Creditors

As regards finance creditors, the Secretary of State has agreed with the administrators that, for an initial period of at least 45 days, all non-default finance charges and scheduled principal repayments (excluding principal that would be rolled over in the normal course) will be paid on their due dates and will continue to be paid for those finance creditors that enter into acceptable standstill arrangements until a transfer scheme is proposed.

In addition, in the case of those finance creditors that enter into these standstill arrangements, it is the Secretary of State’s firm intention to ensure that a proposal is made to the administrators which would, if accepted, result in the transfer of the business of the Company and such finance creditors’ indebtedness to a new, financially sound vehicle and the debt transferred will have (at the time of the transfer) a long-term credit rating of at least BBB/Baa2 and a short-term credit rating of at least A-2/P-2 (Standard & Poor’s Rating Services/Moody’s Investors Service Inc.).

It is the intention that that indebtedness will be transferred on broadly the same economic terms (e.g. coupon and maturity), applicable in the absence of any default, as applied immediately before the administration.

This letter has referred in broad summary terms to agreements made with the Company in administration regarding the provision of loan finance to meet commitments to trade creditors and regarding the payment of “non-default” finance charges and repayments of principal to finance creditors. Those agreements are intended to be legally binding and to have effect in accord with their full terms. This letter also states the firm intention of the Secretary of State regarding a proposal to the Company in administration for the transfer of its undertaking and of finance creditors’ debt but the Secretary of State cannot and does not fetter his discretion how to act as circumstances develop and therefore this letter is not intended to, and does not, constitute or give rise to any legally binding or other obligation on him or contain any representation, nor should any reliance be placed on it, in that regard.

Yours faithfully

.............................................................

For and on behalf of the Secretary of State
for the Department of Transport, Local Government
and the Regions

CA012800035

Railnews Archive ::: 2001-10-07 DTR-002