£757m deal sees UK sell its stake in Eurostar

 

The UK government has sold its entire stake in the cross-Channel train operator Eurostar in a deal worth £757.1m to the exchequer.

The move passes the Government’s 40% share of the operator to an Anglo-Canadian consortium while the French and Belgian national railways continue to own the rest.

Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) and Hermes Infrastructure, a UK-based investment fund, part of Hermes Investment Management, bought the Government’s stake for £585.1m - 30% passing to CDPQ and 10% to Hermes.

The Treasury also gained an additional £172m after Eurostar agreed to buy back the Government’s preference shares as a side-deal. These preference shares are understood to have not paid out fixed dividends but are linked to Eurostar’s hundreds of millions in tax losses.

The deal is part of a government £20bn corporate and financial asset fire sale by 2020 to help pay off the national debt.

Chancellor George Osborne said the deal ‘exceeds expectations’ following the six month bidding battle that ensued after the Government invited offers in October 2014.

‘Investing in the best quality infrastructure for Britain, getting the best value for money for the taxpayer and tackling our country’s debts are key parts of our long term economic plan, and in today’s agreement, we are delivering on all three,’ he added.

The deal has raised some eyebrows however as Eurostar continues to be successful, sustaining traffic growth every year for the last decade, and the UK Government’s dividend was up to around £8m a year.

The French and Belgian national groups SNCF and SNCB – the other shareholders in Eurostar – have a ‘Pre-emption Right’ option to acquire the 40% stake for a 15% premium on the agreed price of £585.1m.

General secretary Mick Cash described the deal as 'pure Thatcherite industrial vandalism that makes us a laughing stock across Europe'.

'The Eurostar sell-off is a gross act of betrayal of the British people by a right wing government hell bent on selling off the family silver regardless of the real cost. The French and Belgians think we are insane knocking off such a valuable and strategic infra structure asset.'

In September 2010, Eurostar became a unified corporate entity owned by three shareholders: SNCF, SNCB and LCR – formally British Rail. In June 2014 the UK government transferred its holding from LCR to the Treasury.

 

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