High Speed One goes under the hammer

High Speed One goes under the hammer

The UK’s High Speed One rail link has been put up for sale as part of the government programme to cut £1 trillion deficit. The auction is expected to fetch at least £1.5 billion, with France’s Groupe Eurotunnel and Australia’s Macquarie favourites.

The privatisation of High Speed One, which links London St Pancras International station and the Channel tunnel, will be announced in the emergency budget on Tuesday, after officials signed off the pre-qualification questionnaire that will vet suitors.

Network Rail, which owns the rest of Britain’s mainline rail network, was the only UK operator to have expressed an interest, but surprised the market by ruling itself out of bidding due to lack of access to easy capital.

High Speed One is owned by London and Continental Railways (LCR), which is in turn 100% controlled by the Department for Transport (DfT).

Last Friday, European competition authorities approved a restructuring of Eurostar that will facilitate the sell-off of High Speed One. Under the agreement, Eurostar’s current owners, London & Continental Railways (LCR) and SNCF will create a “New Eurostar” company, but on condition that the routes between London and continental
Europe be opened up to new competition.

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The new group, which will create a single Eurostar company board for the first time, giving it control of its own profit and loss account.

The UK government took ownership of LCR last June under agreements signed in 1998 when the government guaranteed £3.75bn of the struggling group’s debt. The property holdings will be sold gradually as development of the areas continues.

The winning bidder of High Speed One will secure a 30-year concession to operate the rail route and its stations.

The sale of High Speed One, which cost £5.8bn to build, will include St Pancras International terminal and stations at Stratford, Ashford and Ebbsfleet, as well as the 68-mile route. Its main source of income is the track access charges paid by Eurostar, but St Pancras is also a successful retail outlet in its own right, earning more than £10m last year.