Forum Archive Index - May 2003

[Marilyn Munroe <who.c@res.co.nz>]

Snoopys argument that shareholders of Transrail (TRH) are taking a large risk 
in expecting the government to bail out TRH is supported by examining the 
United Kingdom government's handling of a similar situation.

The Thatcher govt split British Rail into separate parts and privatised them. 
Some companies ran the trains and 'Raitrack' was charged with providing 
infrastructure such as track and signals.

A series of disasters such as the Clapham Junction smash and Hatfeild showed 
up serious shortcomings in rail safety, eroded public confidence in rail 
travel, and exposed a large maintenance deficit.

The balance sheet of Railtrack was in similar condition to the physical 
assets. A mountain of debt and continuing financial losses.

Banks and shareholders were leery about financing the capital required to 
bring the network up to the required standard.

In October 2001 Stephen Beyers the U K Transport Secretary declared Railtrack 
bankrupt and rolled all the assets into a new company under his control. 
Shareholders who had assumed that the government would come to Railtrack's 
rescue for political reasons were left with worthless paper.

I am of course assuming that that the N Z Labour govt. is at least as astute 
as the (Blair) U K Labour govt.

Given the Hon. Michel Cullen's history of splashing taxpayers cash to keep a 
teetering airline airbourne, I may be mistaken.

Boop-boop-de-do Marilyn

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