Business – Bonds save LCR #400m in interest costs

London & Continental Railways expects to save up to #400m in interest costs on a proposed issue of bonds in the next few months due to the fall in interest rates, its finance director said this week, writes Ben Griffiths.

The company, which is building the #5.8bn Channel Tunnel Rail Link, abandoned plans to issue additional equity following the Inland Revenue’s refusal to guarantee tax breaks to new investors.

FD Rob Holden said LCR was forced to consider alternative funding when its original plan failed. In January, it advised deputy prime minister John Prescott that it could not continue with its obligations. LCR’s new plan was agreed on 3 June.

‘The new option does not involve a significant equity issue,’ said Holden.

‘Most of the funding is being provided by government-guaranteed bond issue and a commercial debt facility arranged and guaranteed by Railtrack. Therefore, the equity issue can be deferred.’

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